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Commerce Park Associates, LLC v. Robbins

Court of Appeals of Connecticut

October 22, 2019


          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.


          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.


         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 ...

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