Commerce Park Associates, LLC v. Robbins

         Argued March 12, 2019

         Appeal from Superior Court, Judicial District of Fairfield, Krumeich, J.

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          James M. Moriarty, with whom, on the brief, was Aaron A. Romney, Bridgeport, for the appellant-cross appellee in AC 41398 (defendant in the first case).

         Colin B. Connor, with whom were Joseph DaSilva, Jr., Norwalk and Robert D. Russo III, Southport, for the appellee-cross appellant in AC 41398 (plaintiff in the first case).

         Joseph DaSilva, Jr., Norwalk, with whom were Colin B. Connor and, on the brief, Robert D. Russo III, Southport and Marc J. Grenier, Norwalk, for the appellants in AC 41543 (defendants in the second case).

         James M. Moriarty, with whom, on the brief, was Aaron A. Romney, Bridgeport, for the appellee in AC 41543 (plaintiff in the second case).

         Lavine, Prescott and Eveleigh, Js.

          OPINION

         PRESCOTT, J.

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          [193 Conn.App. 702] 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 [193 Conn.App. 703] 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

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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 [193 Conn.App. 704] (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 [193 Conn.App. 705] 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

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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.)

         [193 Conn.App. 706] 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 [193 Conn.App. 707] remainder of the premises, including the surgical center.^[8]

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          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, [193 Conn.App. 708] 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 [193 Conn.App. 709] 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

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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 ... [193 Conn.App. 710] 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]

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          [193 Conn.App. 711] 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 [193 Conn.App. 712] 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]

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          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 [193 Conn.App. 713] 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 ...