Date: 10-11-2002

Case Style: Putnam Park Associates v. Fahnestock and Company, Inc.

Case Number: AC 21789

Judge: Flynn

Court: Court of Appeals of Connecticut

Plaintiff's Attorney: William J. O’Sullivan, with whom, on the brief, was Gale S. Dwyer, for the appellee-appellant (plaintiff).

Defendant's Attorney: James A. Fulton, for the appellant-appellee (defendant).

Description: This is an appeal from a judgment awarding $31,413.27 in liquidated damages to the plaintiff, Putnam Park Associates, for breach of a written lease contract by the defendant, Fahnestock and Company, Inc.. The trial court found that the defendant, who was the tenant under the lease, had breached its duty to pay ‘‘additional rent,'' over and above a base level of rent, to cover certain variable ‘‘excess expenses.'' The defendant claims that the trial court improperly (1) refused to hold that the plaintiff's allegations in its complaint were insufficient to sustain the judgment, (2) found that the plaintiff had provided statements to the defendant detailing the additional rent due within the time frame required in the lease and (3) found that the statements provided were certified in accordance with the provisions of the lease. The plaintiff cross appeals from that part of the court's judgment that denied the plaintiff's request for interest, late charges and attorney's fees and costs. The plaintiff claims that (1) the court's denial of interest and late charges was clearly erroneous, and (2) the trial court abused its discretion when it denied the plaintiff's request for attorney's fees and costs. We affirm that part of the judgment awarding damages for the defendant's breach of the additional rent terms of the lease. We reverse that part of the judgment denying the plaintiff's request for interest, late charges and attorney's fees and costs.

The following undisputed facts and procedural history are relevant to our resolution of these appeals. The defendant is a corporation that leased the second floor of a commercial building from the plaintiff for a five year term from November 25, 1987, through November 24, 1992. Pursuant to the written lease agreement for a Wethersfield office building, the defendant agreed to pay the lessor, the plaintiff, as additional rent its proportional share of the cost of certain real estate property taxes to the town of Wethersfield and certain other operating expenses, all as more particularly set forth in the rider to the lease agreement, which states in relevant part as follows:

‘‘(d) (i) On or before March 1 of each calendar year (or as soon thereafter as is practical), Landlord shall deliver to Tenant a statement, certified by a partner of Landlord, of Tenant's proportionate share of Excess Expenses for the preceding year. If Tenant's proportionate share of the actual Excess Expenses for the preceding year exceeds the aggregate of the estimated monthly payments made by Tenant during such year, Tenant shall within ten (10) days of the receipt of such statement, tender to Landlord an amount equal to such excess as Additional Rent.''

This dispute arises because the plaintiff did not bill the defendant until September of 1994 for the additional rent for the years 1990, 1991 and 1992. The five year lease between the parties had expired by its terms in November of 1992.

In count one of its two count complaint, the plaintiff claimed that for a period of three years, the defendant breached its contractual duty to pay ‘‘additional rent'' to the plaintiff to cover variable ‘‘excess expenses,'' which included a share of the real estate taxes and operating expenses of the real property subject to the lease. The plaintiff's second count sounded in quantum meruit and was not addressed by the court.

In its answer, the defendant denied any current obligation to furnish the plaintiff with additional rent under the lease. The defendant advanced several special defenses. First, the defendant claimed that the plaintiff failed to follow the procedures described in the lease for obtaining additional rent. Specifically, paragraph (d) (i) of the rider to the lease stated: ‘‘On or before March 1 of each calendar year (or as soon thereafter as is practical), [the plaintiff] Landlord shall deliver to [the defendant] Tenant a statement, certified by a partner of Landlord, of Tenant's proportionate share of Excess Expenses for the preceding year.'' The defendant alleged that those procedures constituted a condition precedent to recovering additional rent. The defendant also claimed that the plaintiff waived its right to collect additional rent and that it was barred from recovering additional rent by the applicable statute of limitations and the doctrine of laches. The defendant also claimed that the plaintiff was not entitled to recover damages under its second count, which sounded in quantum meruit. Finally, the defendant alleged that it had surrendered the leased premises in 1992 and that any obligation to furnish additional rent terminated at that time.1

The court found that the plaintiff's procedures for billing additional rent did not constitute the failure of a condition precedent to recovering additional rent. Although the plaintiff did not provide statements detailing the amount of additional rent due for the calendar years 1990, 1991 and 1992 until September 12, 1994, the court found that this delay was ‘‘commercially understandable.'' In its memorandum of decision, the court found that the litigants had established ‘‘an atmosphere in which late statements would be tolerated'' through the course of the parties' performance. For the years 1989 and 1990, the defendant paid without objection invoices for additional rent that were sent to the defendant after the time permitted in the additional rent provisions of the lease. The plaintiff alerted the defendant that it had been embroiled in a dispute with its mortgagee concerning the proper amount of additional rent, which explained the delay in providing the statements. The court also noted that the lease provisions governing the procedure for obtaining additional rent contained flexible language and that the lease did not indicate that ‘‘time was of the essence.'' Paragraph (d) (i) of the rider to the lease stated: ‘‘On or before March 1 of each calendar year (or as soon thereafter as is practical), [the plaintiff] Landlord shall deliver to [the defendant] Tenant a statement . . . .'' (Emphasis added.) The court found that the plaintiff had sufficiently performed its duty to provide certified statements because a partner of the plaintiff, P. Christopher Henney, had ‘‘written and signed'' the letter accompanying the statements.

The court awarded damages of $31,413.27, reflecting the amount of additional rent originally invoiced to the defendant for 1990, 1991 and 1992. The court did not award any damages for interest, late charges or attorney's fees and costs because it found that the defendant had raised and proven equitable claims, including laches, that should bar recovery of such damages. The present appeal and cross appeal followed. Further facts and procedural history will be set forth where necessary.

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‘‘[O]ur resolution of the [plaintiff's] claim is guided by the general principles governing the construction of contracts. A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract. . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. . . . Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686, 697 A.2d 1137 (1997). Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law. . . . Levine v. Massey, 232 Conn. 272, [277– 78], 654 A.2d 737 (1995); see Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994), on appeal after remand, 38 Conn. App. 546, 662 A.2d 153 (1995); Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 158, 595 A.2d 872 (1991); Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131, 523 A.2d 1266 (1987); Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266, 274–75, 439 A.2d 314 (1981).'' (Internal quotation marks omitted.) Pesino v. Atlantic Bank of New York, 244 Conn. 85, 91–92, 709 A.2d 540 (1998).

‘‘When . . . the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct . . . . Practice Book § 4061 [now § 60-5]; United Illuminating Co. v. Groppo, 220 Conn. 749, 752, 601 A.2d 1005 (1992); Zachs v. Groppo, 207 Conn. 683, 689, 542 A.2d 1145 (1988); Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221–22, 435 A.2d 24 (1980). Morton Buildings, Inc. v. Bannon, 222 Conn. 49, 53, 607 A.2d 424 (1992).'' (Internal quotation marks omitted.) Issler v. Issler, 250 Conn. 226, 236, 737 A.2d 383 (1999). Under the circumstances of this case, because the trial court did not rely solely on the written agreement but took into account the surrounding circumstances, we apply the clearly erroneous standard to the court's factfinding.

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‘‘Where no time for the performance of a contract is contained within its terms, the law presumes that it is to be performed within a reasonable time. Texas Co. v. Crown Petroleum Corporation, 137 Conn. 217, 227, 75 A.2d 499 [1950]; Santoro v. Mack, 108 Conn. 683, [689–90], 145 A. 273 [1929]. Benassi v. Harris, 147 Conn. 451, 458, 162 A.2d 521 (1960); see also Central New Haven Development Corporation v. La Crepe, Inc., 177 Conn. 212, 216, 413 A.2d 840 (1979). What is a reasonable length of time is ordinarily a question of fact for the trier. International Tool&Gauge Co. v. Borg, 145 Conn. 644, 648, 145 A.2d 750 [1958]; Loomis v. Norman Printers Supply Co., 81 Conn. 343, 347, 71 A. 358 [1908]. Parkway Trailer Sales, Inc. v. Wooldridge Bros., Inc., 148 Conn. 21, 26, 166 A.2d 710 (1960). . . . Martin v. Martin's News Service, Inc., 9 Conn. App. 304, 308–309, 518 A.2d 951 (1986), cert. denied, 202 Conn. 807, 520 A.2d 1287 (1987).'' (Internal quotation marks omitted.) Schlicher v. Schwartz, 58 Conn. App. 80, 86, 752 A.2d 517 (2000).

‘‘The standard of review with respect to a court's findings of fact is the clearly erroneous standard. The trial court's findings are binding upon this court unless they are clearly erroneous in light of the evidence and the pleadings in the record as a whole. . . . We cannot retry the facts or pass on the credibility of the witnesses. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed . . . .'' United Components, Inc. v. Wdowiak, 239 Conn. 259, 263, 684 A.2d 693 (1996).'' (Internal quotation marks omitted.) Schlicher v. Schwartz, supra, 58 Conn. App. 87.

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The plaintiff has cross appealed, claiming that (1) the trial court's decision to deny the plaintiff's request for interest and late charges was clearly erroneous and (2) that the trial court abused its discretion in denying the plaintiff's request for attorney's fees and late charges.

At the time of trial, the amount of interest claimed was $13,570.53, and the total of late charges was $1570.66.

On appeal, the plaintiff claims that court's failure to award interest and penalties provided for in the lease was contrary to §§ 33b and 5 of the lease and that therefore the court's decision is clearly erroneous. It seeks reversal of that decision and a remand to the trial court for further proceedings to determine the proper allowance.

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The court held that ‘‘the defendant has raised several equitable defenses, including laches, which is sufficient, in view of all the circumstances, to negate the claims of the plaintiff for interest, late charges and legal fees.''

The plaintiff in its cross appeal cites Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 415, 456 A.2d 325 (1983). In Pacelli, the trial court gave no reason for not awarding attorney's fees provided in a note which was being collected by litigation, whereas here the court did give reasons. We nonetheless conclude that the reasoning in Pacelli is both persuasive and pertinent because it rests on the concept of the legal instrument's provisions being a whole of which the interest and collection portions are an integral part. In Pacelli, our Supreme Court stated: ‘‘We know of no principle whereby the amount due upon a note which has been found to be valid may be reduced because of conduct of the holder which has been found to be reprehensible but not violative of the legal rights of the maker. The provision for a reasonable attorney's fee was an integral part of the note and, like any other clause determining the amount due, could not be disregarded. Having decided that the note was valid, the [trial] court had no choice but to allow a reasonable attorney's fee as part of the debt.'' Id. We agree with the plaintiff that in light of the clear terms of the agreement, once the court found that the plaintiff was entitled to payment of the additional rent under the lease and that the defendant had not been prejudiced in any way by delay, reasonable attorney's fees, late charges running from the date ten days after the September 12, 1994 date of the invoice and interest from that date were due. As with the note in Pacelli, the phrases describing the plaintiff's right to interest, attorney's fees and late charges were an integral part of the lease instrument.5 If no award to reflect these liquidated damages were made, the plaintiff would not be made whole.

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Click the case caption above for the full text of the Court's opinion.

Outcome: On the defendant’s appeal, the judgment is affirmed. On the plaintiff’s cross appeal, the judgment is reversed as to the refusal to award interest, attorney’s fees and late charges and the case is remanded for further proceedings to determine the proper amount of interest, attorney’s fees and late charges.

Plaintiff's Experts: Unavailable

Defendant's Experts: Unavailable

Comments: None