Argued
March 12, 2019
Procedural
History
Action,
in the first case, to recover damages for breach of a
commercial lease agreement, and for other relief, brought to
the Superior Court in the judicial district of Fairfield,
Housing Session at Bridgeport, and action, in the second
case, to recover damages for, inter alia, the defendants'
alleged negligence, and for other relief, brought to the
Superior Court in the judicial district of Fairfield, where
the actions were consolidated and tried to the court,
Krumeich, J.; judgment in part for the
plaintiff in the first case and judgment in part for the
plaintiff in the second case, from which the defendant in the
first case appealed and the plaintiff in the first case cross
appealed to this court; thereafter, the court,
Krumeich, J., granted the motion to reargue
and for reconsideration filed by the plaintiff in the second
case and denied the motion to reargue and for reconsideration
filed by the defendants in the second case, and the
defendants in the second case appealed to this court. In
AC 41398, reversed in part; further
proceedings. In AC 41543, reversed in
part; judgment directed.
James
M. Moriarty, with whom, on the brief, was Aaron A. Romney,
for the appellant-cross appellee in AC 41398 (defendant in
the first case).
Colin
B. Connor, with whom were Joseph DaSilva, Jr., and Robert D.
Russo III, for the appellee-cross appellant in AC 41398
(plaintiff in the first case).
Joseph
DaSilva, Jr., with whom were Colin B. Connor and, on the
brief, Robert D. Russo III and Marc J. Grenier, for the
appellants in AC 41543 (defendants in the second case).
James
M. Moriarty, with whom, on the brief, was Aaron A. Romney,
for the appellee in AC41543 (plaintiff in the second case).
Lavine, Prescott and Eveleigh, Js.
OPINION
PRESCOTT, J.
The
present appeals and cross appeal arise from two actions
involving a commercial lease that share a nucleus of
operative facts and were consolidated for trial. They raise,
among other issues, whether the landlord's failure to
take actions to remedy recurrent sewage backups into the
leased premises occupied by an eye surgery center resulted in
a constructive eviction that excused the tenant from the
obligation to pay rent in accordance with the terms of the
lease, and whether, as a result of the alleged inaction of
the landlord and its property management company, the eye
surgery center was entitled to recover compensatory damages
for the loss of its use of improvements it previously had
made to the premises.
In the
action underlying AC 41398 (rent action), Commerce Park
Associates, LLC (Commerce Park), [1] sought to recover rent it
alleges it was owed by a former tenant, Kim Robbins-an
ophthalmologist and the owner of Robbins Eye Center, P.C.
(REC). REC had occupied the lower level of a commercial
property owned by Commerce Park in Bridgeport pursuant to a
commercial lease but vacated the premises prior to the
lease's expiration following a series of sewage backups
that flooded the premises. Robbins now appeals, and Commerce
Park cross appeals, from the judgment of the trial court
rendered in part in favor of Commerce Park. Robbins claims
that the court improperly (1) awarded Commerce Park rent for
a period of time from November, 2014, through the third full
week of April, 2015, and (2) miscalculated the amount of the
rent that she owed for that period. Commerce Park claims by
way of cross appeal that the court improperly determined that
Robbins was constructively evicted from the premises after
the third full week of April, 2015, by the sewage backups,
and, consequently, Commerce Park was not entitled to recover
any rent from Robbins after that date. We affirm the judgment
of the court with the exception of its calculation of the
amount of the rent awarded to Commerce Park and, accordingly,
remand for a new hearing in damages in the rent action.
In the
action underlying AC 41543 (tort action), REC sued Commerce
Park and its property manager, RDR Management, LLC (RDR),
seeking monetary damages for economic injuries that REC
suffered as a result of their failure to make necessary
repairs to the premises. Commerce Park now
appeals[2] from the judgment of the trial court
rendered in part in favor of REC and awarding REC damages of
$958, 041.92 against Commerce Park.[3]Commerce Park claims that the
trial court improperly (1) awarded damages on the basis of
gross negligence because (a) Connecticut common law does not
recognize distinctions or degrees of negligence and (b) REC
never pleaded or otherwise asserted allegations of gross
negligence prior to trial; and (2) miscalculated the amount
of damages awarded because the court (a) utilized an
incorrect measure of damages in determining REC's losses
and (b) misconstrued the length of Robbins' expected
tenancy under the lease, which was an integral component of
the court's calculation of damages. We agree that the
court improperly included two unexercised lease extension
options in determining the length of Robbins' tenancy
and, accordingly, reverse the amount of damages awarded; we
otherwise affirm the judgment of the court in the tort
action.
The
following facts, which either were stipulated by the
parties[4] or found by the trial court, and
procedural history are relevant to our discussion of the
parties' claims. Beginning in 1995, Robbins leased from
Commerce Park increasing amounts of space in the lower level
of a commercial building it owned at 4695 Main Street in
Bridgeport (building). The building, which was constructed in
1964, primarily houses medical offices and is part of a
complex of office buildings owned by Commerce Park. By 2014,
the building's roof, foundation, and sanitary sewer
system were in poor condition and in need of repair.
Although
Robbins executed the original and all subsequent leases, the
leased space was occupied by REC, Robbins'
ophthalmological and surgical practice. REC is a domestic
professional corporation with Robbins as its sole
shareholder. REC paid all rents and other charges due under
the operative lease and carried all required insurance
policies, which, as described by the court, made REC
‘‘the de facto tenant of the leased space with
whom the landlord dealt.''
On
August 1, 2007, Robbins executed the lease at issue in the
present appeals and cross appeal. Pursuant to the lease,
Robbins agreed to rent the entire lower level of the building
(premises), which consisted of 20, 750 square feet of space.
The lease was for a fifteen year term, with the tenant,
Robbins, having the option of extending the lease for two
additional five year terms. The lease required Robbins to pay
rent at an adjustable rate, starting at $186, 750 per year
and payable in monthly installments of $15,
562.50.[5] Robbins also was responsible for paying a
pro rata share of the building's property taxes as
additional rent.
Paragraph
23 (c) of the lease provided in relevant part:
‘‘In the event the Demised Premises shall be
damaged by fire or other casualty and shall be rendered
wholly or partially untenantable, then . . . Landlord shall,
at Landlord's own cost and expense, proceed with all
reasonable dispatch to cause the damage to be repaired and in
the case of partial damage, the monthly rental for any period
of such repair which is not otherwise covered by Tenant's
business interruption insurance shall be abated in proportion
to the portion of the Demised Premises rendered untenantable
. . . .''
Paragraph
16 (b) of the lease provided in relevant part:
‘‘[U]nless caused by the gross
negligence or willfulness of Landlord, or of Landlord's
agents, Landlord shall not be responsible or liable to
Tenant, or any person, firm or corporation claiming by,
through, or under Tenant for, or by reason of, any defect in
the Demised Premises . . . or from any injury or loss or
damage to person or property of Tenant, for loss of or damage
to property contained in or upon the Demised Premises . . .
caused by or arising or resulting from pipes . . . or by or
from any defect in or leakage, running or overflow of water
or sewerage in any part of the Demised Premises . . .
.'' (Emphasis added.)
After
signing the new lease, Robbins hired a contractor to
transform the premises into what the trial court found was a
‘‘state-of-the-art eye care center, complete with
a surgical center with two operating rooms certified by the
state for optical surgery . . . a LASIK facility, and an
optical shop.'' The remodeling was completed in
December, 2009, at a cost of $1, 186, 267.[6]
In
September, 2013, during a period of heavy rain, a downspout
detached from a roof drain, which allowed water to flood into
the building and inundate parts of the lower
level.[7] The flooding from above was exacerbated by
groundwater that seeped in through the building's porous
foundation. The water caused substantial damage to REC's
equipment, materials, and work spaces. As a result of the
flooding, REC was forced to suspend business completely for
six weeks. Afterward, by relocating its examination rooms and
a downsized version of its optical shop into portions of the
premises designated for administrative offices, REC was able
partially to resume operations, albeit utilizing only
approximately one half of the leased premises.
For
months, mold would appear at various times and locations
within the premises. By the end of October, 2014, however,
REC had repaired the flood damage, remediated the mold
infestations, and reoccupied the remainder of the premises,
including the surgical center.[8]
At
other times, both before and after the major flooding
incident in 2013, REC's normal operations were
interrupted due to contaminated water that leaked into the
premises from blocked toilets in the offices or common areas
of the upper floors of the building. Patients and staff often
smelled urine or other foul odors at various locations
throughout the lower floor. The court found that these
various smaller leaks, although certainly disruptive, never
rendered the premises untenantable. Nevertheless, as the
court noted, ‘‘Robbins and REC became
disenchanted with RDR's and [Commerce Park's]
attitude and efforts to maintain and repair the building. The
periodic plumbing problems, unpleasant odors and mold blooms
proved to be quite disruptive [to] the practice and eroded
any goodwill remaining between Robbins and REC, on one side,
and RDR and [Commerce Park], on the other.'' On the
basis of the various problems with the premises, beginning in
September, 2013, and continuing until the time REC vacated
the premises on June 30, 2015, Robbins, through REC, paid
only approximately one half of her monthly rental obligation
under the lease.
Beginning
in April, 2015, and continuing into May and June, 2015, the
building's sewage system backed up, causing sewer water
and waste to flood the premises. Specifically, sewage flooded
the premises on April 23, 27, and 28, 2015. In addition, on
April 29, 2015, a plumber hired by RDR accidently cut a waste
pipe, causing additional sewer water and fecal matter to
contaminate REC's offices. Continued incidents of sewage
backups in the following months culminated in a major event
on June 29, 2015. At that time, REC complained to municipal
authorities, including Lawrence Palaia, the sanitarian of the
city of Bridgeport. Palaia, who described the premises as
having ‘‘sewer water all over the place,
'' issued a notice of violation to Commerce Park and
RDR, and ordered REC to close operations until the problem
was remedied. As set forth in the court's memorandum of
decision, ‘‘[t]he notice demanded that [Commerce
Park] engage a contractor acceptable to the city [of
Bridgeport], take out any necessary permits, and commence
repairs within three business days. The [premises were]
supposed to be vacant until the city signed off on [their]
condition after repairs and cleanup.'' REC and
Robbins vacated the premises on June 30, 2015.
The
serious and persistent problems with the building's
sanitary sewer system were known by Commerce Park and RDR and
were well-documented. The court made the following findings
regarding the problems that existed and the response by
Commerce Park and RDR: ‘‘[T]here were several
serious backups of the sewer system . . . into the [premises]
as a result of known defects in the sewer system that RDR and
[Commerce Park] failed to address effectively. No one has a
map of the sewer system, which has a main sewer line under
the slab and branch lines connected to an uncounted number of
plumbing fixtures throughout the [b]uilding. The main sewer
line is a gravity fed system that uses four inch cast-iron
pipes to pass sewer water, paper and effluent into a cistern,
where it is collected and, when it reaches a certain level,
is ejected out of the [b]uilding by two ejector pumps. One
problem with the system is that there is insufficient pitch
in the main line to efficiently pass water and material to
the cistern. . . . [T]here was insufficient space for the
existing main line to be building code compliant in pitch of
the pipes into the cistern. The other related problem is that
the system lacked uniformity of pitch. The cast-iron pipe
used in the system has multiple sags, some of which were
major and acted as pockets that trapped water and material
flushed down the toilets that, together with insufficient
pitch, ultimately led to clogs, which backed up the system
and sent sewer water, effluent and raw sewage into the lower
level occupied by REC on a number of occasions.''
(Internal quotation marks omitted.)
As
further explained by the court, on at least five occasions
between 1997 and 2015, sewer contractors hired by RDR made
videotapes of the sewer system in conjunction with clearing
out blockages in the system. ‘‘These videos
demonstrated a deteriorating sewer piping system as
penetration of the pipe and sags worsened over time. The
first video in 1997 showed a penetration of a rock into the
main line, and subsequent videos in 2014 and 2015 showed
multiple sags worsening over time. . . . [T]here were sags
throughout the main line and laterals, some of which were
major and severe enough to cause backups. . . . [T]here were
clogs all over the system, not just in one place . . . .
[F]loods to the lower floor would be caused by a clog in the
main line, not the laterals. . . . [T]he recurrence of
problems more frequently indicated [that] there was a problem
with the performance of the system, and [RDR's sewer
contractor] had discussed the defects and possible remedies
with RDR, such as cutting up the floor to replace the pipes,
as well as controlling what went into the system. A former
employee of RDR . . . was present when a video was taken on
June 12, 2014, and informed RDR of the sewer contractor's
concern about sags that needed to be fixed, and also about
the need to rip up the floors to make repairs to the pipes.
He was also present when the video was taken on June 28,
2015, when multiple sags were seen, and he told RDR . . .
that the sewer contractor expressed concern about sags, in
particular, a major sag in the main line, approximately
twenty feet from the ejector pit, that needed to be dug up
and fixed. . . . [T]he major sags, along with lack of pitch,
had become worse over time and interfered with the
performance of the system and caused the sewage backups into
the [premises].'' (Footnotes omitted; internal
quotation marks omitted.)
Moreover,
as expressly found by the court, both RDR's sewer
contractor and RDR's own personnel had advised RDR about
the presence of the sags in the system, that those sags were
the cause of the many sewer backups in the building, and that
the sags could be remedied properly only by tearing up the
floor and replacing the affected sections of the pipe. RDR
also was informed by its contractor that, if it chose not to
repair the sags, ‘‘it would be necessary to carry
on a preventative maintenance program to periodically snake
the sewer system to break up potential clogs before they were
formed. RDR and [Commerce Park] pursued neither course but
merely decided to address system backups as they
occurred.''[9]
Commerce
Park commenced the action against Robbins for back rent on
June 24, 2014, which was after the flooding event of
September, 2013, but prior to the major sewage backups in
2015. The one count complaint alleged that Robbins had
breached her obligations under the lease because, after
August, 2013, she had failed to make the full required
monthly rental payments.
Robbins
filed an answer, special defenses, and counterclaims on
August 14, 2014. By way of special defense, Robbins asserted
that Commerce Park breached the lease by failing to maintain
the premises in a tenantable condition, thus excusing her own
nonperformance. Robbins further claimed that she was entitled
to a setoff from any rent owed for the damages she sustained
as a consequence of Commerce Park's ‘‘gross
negligence and wilfulness in maintaining the leased premises,
'' and that she was entitled to an abatement of the
rent under the provisions of the lease due to damage from the
water and sewer infiltrations that rendered the premises
untenantable. Robbins also alleged counterclaims sounding in
breach of contract, tort, constructive eviction, and a
violation of the Connecticut Unfair Trade Practices Act
(CUTPA), General Statutes § 42-110a et seq.
Robbins
later determined that the damages she sought by way of relief
in her counterclaims in the rent action actually were
incurred by REC. Consequently, on September 9, 2016, REC
commenced the underlying tort action against Commerce Park
and RDR. Count one of the operative complaint in the tort
action alleged negligence against Commerce Park for breach of
its duty to properly maintain the premises. Count two alleged
negligence against RDR for breaching its property management
responsibilities by utilizing unlicensed plumbers to conduct
repairs, knowing that failure to repair and replace the
sewage line properly could cause substantial damage to REC.
Count three alleged common-law recklessness by Commerce Park.
Counts four and five alleged violations of CUTPA against
Commerce Park and RDR, respectively.
On
October 7, 2016, Robbins filed a motion seeking to
consolidate the two matters, which the court granted. Robbins
thereafter withdrew her counterclaims in the rent action. The
matters were consolidated and tried to the court,
Krumeich, J., over seven days in July,
2017. The parties each submitted multiple posttrial briefs.
The
court issued a memorandum of decision resolving the two
actions on February 6, 2018. The court first addressed
Commerce Park's allegations in the rent action that
Robbins had breached the lease and that it was owed
additional rent for the period of time that REC occupied the
premises but had failed to pay its full monthly rental
obligations, as well as for the time period after REC vacated
the premises through the termination date of the lease. The
court agreed with Robbins that REC had been constructively
evicted from the premises as a result of the numerous sewer
backups beginning in the last week of April, 2015, and
continuing until REC vacated the premises at the end of June,
2015. Accordingly, the court determined that Commerce Park
was not owed any rent under the lease from April 23, 2015,
through the end of the lease period.[10]
The
court determined, however, that Commerce Park was owed
additional rent for a portion of the period beginning in
September, 2013, and continuing through the first three weeks
of April, 2015, during which time REC had paid only one half
of the total rent due under the lease. According to the
court, ‘‘[w]ith respect to the period [of]
September, 2013, to October, 2014, there should be a partial
rent abatement that, based roughly on the area affected,
justifies the reduced rent paid by REC. There were five and
three-quarter months, however, [between November, 2014, and
April 22, 2015], when there [were] no grounds to abate the
rent. Failure to pay the full rental for those months was a
breach of the lease, and [Commerce Park] was damaged to the
extent [that] rents for those months were reduced
unilaterally by the tenant in the amount of $89, 484.37 ($15,
562.50 per month for [six] months minus $3, 890.63 for the
last week of April, 2015).''[11]
The
court next turned to REC's claim for damages in the tort
action against Commerce Park and RDR premised on allegations
of negligence, recklessness, and violation of CUTPA. The
court explained that Commerce Park ‘‘relies on
the negligence waiver in [paragraph 16 (b) of] the lease as a
defense, which it argues also extends to its agent,
RDR.''
The
court first determined that, although the indemnification
clause of the lease prevented Robbins and REC from recovering
on the basis of any ordinary acts of negligence on the part
of Commerce Park relating to the sewage backups or seepage of
water caused by the porous foundation, such exculpation, by
the plain terms of the clause, did not extend to RDR as
Commerce Park's agent. Nevertheless, the court found that
RDR could not have repaired the sewer problems without
authorization from Commerce Park because the problems went
beyond simple maintenance issues and would have required
major capital expenditures by Commerce Park. For that reason
and others, the court concluded that any failure by RDR to
repair the sewer system was, under the circumstances, neither
negligent, reckless or a violation of CUTPA.
With
respect to Commerce Park, the court first determined that its
liability for any ordinary negligence clearly was waived by
REC under the terms of the lease's waiver provision. The
court noted, however, that the waiver clause expressly
excluded any waiver of liability for conduct that amounted to
‘‘gross negligence'' or, by logical
extension, recklessness. See Doe v. Hartford Roman
Catholic Diocesan Corp., 317 Conn. 357, 382, 119 A.3d
462 (2015) (recklessness involves conduct that
‘‘is more than negligence, more than gross
negligence'' [internal quotation marks omitted]). The
court relied on our Supreme Court's definition of gross
negligence as ‘‘very great or excessive
negligence, or as the want of, or failure to exercise, even
slight or scant care or slight diligence . . . .''
(Internal quotation marks omitted.) 19 Perry Street, LLC
v. Unionville Water Co., 294 Conn. 611, 631 n.11, 987
A.2d 1009 (2010).
With
respect to whether Commerce Park's actions or inaction in
the present case amounted to gross negligence, the court
reasoned as follows: ‘‘The failure to repair the
sewer system or to carry out a preventative maintenance
program breached [Commerce Park's] duties under the lease
and was more than ‘mere neglect' but, [rather], a
conscious choice to risk future floods and expose REC to
repeated disruption of its business. . . . It was foreseeable
that [Commerce Park's] decision not to make the repairs
to the sewer system recommended by the sewer contractor in
violation of its repair obligations under the lease
(paragraphs 16, 18, 23) and common-law duty, or its failure
to carry out a preventative maintenance program outlined by
the contractor as an alternative, would result in future
sewage overflows in the basement space occupied by REC. It
was also foreseeable that periodic sewage floods into the
[premises] would seriously disrupt Robbins' and REC's
ability to conduct a medical practice in the offices and to
use the operating rooms, rendering the [premises]
untenantable. [Commerce Park's] conduct was grossly
negligent.'' (Citation omitted.)
Although
the court concluded that REC was entitled to damages as a
result of Commerce Park's gross negligence, it ruled in
favor of Commerce Park with respect to the additional counts
alleging recklessness and a violation of CUTPA. The court,
citing to our Supreme Court's definition of recklessness
in Matthiessen v. Vanech, 266 Conn. 822, 832-33, 836
A.2d 394 (2003), found that, although Commerce Park's
decision not to heed expert advice regarding the defects in
the sewer system was grossly negligent, its actions
‘‘did not sink to the level of highly
unreasonable conduct, involving an extreme departure from
ordinary care'' and, thus, ‘‘did not
constitute reckless conduct.''[12] (Internal
quotation marks omitted.) The court also rejected the CUTPA
count against Commerce Park, finding that the evidence
presented failed to demonstrate unfair ordeceptive conduct
that would violate the ‘‘cigarette
rule.''[13] (Internal quotation marks omitted.)
The
court recognized that quantifying the amount of damages to
award REC for Commerce Park's gross negligence was a
challenge. The court first acknowledged that there was
insufficient evidence presented to award REC damages on the
basis of lost profits resulting from the interruption of its
business. The court, however, concluded that if a tenant has
made improvements to a leased premises and is subsequently
forced by the landlord's misconduct to abandon the
premises, the tenant is entitled to recover damages on the
basis of its loss of the beneficial use of the improvements
the tenant would have enjoyed during the remaining term of
the lease. Such damages, according to the court, are measured
by determining the period of time the tenant had use of the
improvements compared against the period of time the tenant
would have had the right to use them under the terms of the
lease. The court found that REC had used the improvements it
made to the premises for ‘‘five years and four
months out of a twenty-two year term (ten years after the
completion of the improvements plus two five year options).
Therefore, REC's damages are 75.8 percent of the
improvement cost, which totals $899, 190 ($1, 186, 267 x 75.8
percent).''
REC
filed a motion for an award of postjudgment interest, and
both REC and Commerce Park filed motions seeking
reconsideration and reargument of the damages awarded to REC.
Commerce Park argued that any damages attributable to lost
use of improvements should have been calculated from the
lease's commencement date, not from the date that the
improvements were completed. It also argued that the court
failed to credit against the damages awarded $300, 000 that
Commerce Park allegedly contributed toward the cost of the
improvements. According to REC, it was entitled to additional
damages for expenses that it incurred as a result of having
to abandon the premises, including moving expenses and costs
related to fitting out a new, temporary work space.
The
court heard arguments on the postjudgment motions on March 5,
2018. On March 22, 2018, the court filed supplemental
memoranda of decision, rejecting Commerce Park's
arguments but awarding REC additional damages of $58, 557.55,
for a total award of $958, 041.92, along with postjudgment
interest at a rate of 8 percent per annum.[14] These appeals
and cross appeal followed.
I
AC
41398
We
begin our discussion with the claims arising out of Commerce
Park's action to recover unpaid rent that it asserted
Robbins owed under the lease. Robbins claims on appeal that
(1) the court improperly awarded Commerce Park additional
rent for the period between November, 2014, through the third
full week of April, 2015, and (2) even if she owed additional
rent, the court miscalculated the amount of rent due.
Commerce Park claims by way of cross appeal that the court
improperly determined that ...