Boulevard Associates v. Sovereign Hotels, Inc., 90 Civ. 351 (TFGD).
| Decision Date | 30 August 1994 |
| Docket Number | No. 90 Civ. 351 (TFGD).,90 Civ. 351 (TFGD). |
| Citation | 861 F. Supp. 1132 |
| Parties | BOULEVARD ASSOCIATES, a General Partnership, Plaintiff, v. SOVEREIGN HOTELS, INC., Daka, Inc., and Daka International, Inc., Defendants. |
| Court | U.S. District Court — District of Connecticut |
COPYRIGHT MATERIAL OMITTED
Cohen & Wolf, Frederick S. Gold and Daniel F. Wolf, Danbury, CT, for plaintiff.
Coyne & Gottlieb, John E. Coyne, Boston, MA, for defendants.
This matter arises from a dispute concerning a commercial lease. The jurisdiction of this court is based on diversity of citizenship. 28 U.S.C. § 1332(a)(1). The lease agreement between the parties calls for the application of Connecticut law. Pl.Ex. 1, § 28.3.
The issue presently before the court is the determination of damages as to each defendant.1 Plaintiff Boulevard Associates seeks damages from defendant Sovereign Hotels for the willful breach of a commercial lease that the parties entered into in 1985. Plaintiff also seeks damages from defendant Daka, Inc. as a guarantor of Sovereign's liabilities under the lease. Finally, plaintiff seeks damages from defendant Daka International, Inc. for its tortious interference with the lease agreement.
A trial was held in this matter in June 1994, at which time the court heard the testimony of expert witnesses of both parties concerning the estimated value of plaintiff's equity interest in the leased property located at 225 Lordship Boulevard in Stratford, Connecticut at the natural termination of the lease. Based on the pleadings submitted and the evidence presented by both parties, the court awards plaintiff reliance damages of $1,134,497, punitive damages of $300,000, and costs and attorney's fees in an amount to be determined after the court has received defendants' objections to plaintiff's submission on counsel fees. Finally, plaintiff is entitled to "offer of judgment" interest in an amount computed in accordance with Connecticut General Statutes § 52-192a(b) as more fully described in this opinion.
Although this opinion assumes familiarity with the facts set forth in its prior opinion, Boulevard, 852 F.Supp. 127, a brief overview of the facts which pertain to plaintiff's present claim is necessary.
1. In April 1985, plaintiff Boulevard Associates ("Boulevard"), a Connecticut partnership, and defendant Sovereign Hotels ("Sovereign"), a Massachusetts corporation, entered into a ten-year lease commencing in April 1986 whereby Boulevard agreed to build a hotel on the property that Sovereign would manage. Id. at 129, Pl.Ex. 1, §§ 30, 3.2.
2. Pursuant to the lease, Boulevard was responsible for obtaining the financing of the hotel and actually constructing the premises. Thus, plaintiff obtained an $8,000,000 construction loan from Union Trust Company ("UTC mortgage") and used the entire proceeds to construct the hotel. Boulevard, 852 F.Supp. at 129.
3. In return for Boulevard's promise to build the hotel, Sovereign agreed to pay "minimum rent," "additional rent," and "percentage rent" to plaintiff commencing upon the public opening of the hotel. The minimum rent consisted of the amount necessary to pay the principal and interest ("debt service") on the UTC mortgage, which was secured by the hotel. Sovereign was required to pay the entire debt service on the UTC mortgage, regardless of whether the hotel generated sufficient revenues to cover the payments. Id. at 129-130.
4. In 1989, Sovereign willfully breached the lease, by refusing to make those debt service payments as required by the lease. Sovereign is, therefore, liable for the damages incurred by Boulevard as a result of the breach. Id. at 132.
5. After Sovereign's willful breach of the lease, Boulevard gave Sovereign a notice of default. Plaintiff then conveyed its interest in the property to UTC by quitclaim deed in lieu of foreclosure in September 1989. Id. at 130, Tr. 1/3/94 at 114-120 (Testimony of Peter Penczer). In addition to transferring its property interest, plaintiff assigned to UTC its claim to any unpaid rents owed by defendants prior to conveyance but separately reserved the right to pursue all causes of action that resulted from the breach of the lease agreement. Boulevard, 852 F.Supp. at 130; Pl.Ex. 34.
6. Defendant Daka, Inc. ("Daka"), Sovereign's parent company which is incorporated in Massachusetts, guaranteed all of Sovereign's obligations under the lease in favor of Boulevard, including, but not limited to, Sovereign's obligation to make the required debt service payments to UTC. Boulevard, 852 F.Supp. at 130. Daka is, therefore, jointly and severally liable with Sovereign for all damages incurred by Boulevard as a result of Sovereign's breach of the lease. Id. at 132.
7. Defendant Daka International, Inc. ("Daka International"), Daka's parent company which is incorporated in Delaware, was, as this court found, the catalyst and inducing cause of Sovereign's breach of the lease. Daka International induced that breach in order to protect the financial health of Daka International's consolidated corporate group. Id. at 134-35. Therefore, Daka International is jointly and severally liable with Sovereign and Daka for all consequential damages, other than loss of rents, incurred by Boulevard as a result of Sovereign's breach. Id.
8. Moreover, this court found that the conduct of all defendants was tantamount to a violation of traditional common law concepts of fairness which caused substantial injury to Boulevard by willfully and with reckless disregard violating Boulevard's rights under the lease for their own economic gain. Id. at 135. Therefore, all defendants are jointly and severally liable to Boulevard for violation of the Connecticut Unfair Trade Practices Act, Conn.Gen.Stat. 42-110a et seq. ("CUPTA") Id.
Before discussing plaintiff's damage claim, it is first necessary to address defendants' argument regarding plaintiff's entitlement to damages. Defendants argue that plaintiff should not be awarded damages in this case for Sovereign's breach of the lease agreement because plaintiff failed to terminate the lease after the breach. Def.Concl.Law. at 9-10. Defendants further argue that termination of the lease would have given rise to a cause of action for damages by plaintiff against defendants. Instead of terminating the lease, as required by Connecticut law, Rokalor v. Connecticut Eating Enterprises, 18 Conn.App. 384, 558 A.2d 265 (1989), defendants claim that plaintiff assigned the lease to UTC, thereby continuing defendants' obligations thereunder to pay rent.
In Rokalor, the Connecticut Appellate Court determined whether a landlord could sue to recover unpaid rents from a defaulting tenant after the landlord had terminated the lease. Id. As Boulevard assigned its right to future rents, it is undisputed that plaintiff is no longer entitled to unpaid rents under the lease in this case. However, notwithstanding its assignment, this court has already found that plaintiff expressly reserved its right under § 9.0 of the lease to sue defendants for "any and all consequential and incidental damages" arising from defendants' breach. Boulevard, 852 F.Supp. at 130. Thus, unlike the plaintiff in Rokalor, Boulevard is seeking to recover damages resulting from the breach of the lease agreement, damages to which it is fully entitled under established principles of contract law.
Furthermore, Connecticut courts have long held that the institution of a law-suit by the landlord for damages resulting from the tenant's breach of the lease manifests an intention to terminate the lease. As the court held in Danpar Associates v. Somersville Mills Sales Room, Inc., 182 Conn. 444, 445, 438 A.2d 708, 709 (1980), where "the plaintiff chooses to bring an action for damages for breach of the lease, such action manifests an intention to terminate the lease." (citing Sagamore Corporation v. Willcutt, 120 Conn. 315, 318, 180 A. 464 (1935)).
Plaintiff filed its complaint in this action on July 19, 1990, alleging consequential damages, tortious interference with the lease agreement, and violation of the Connecticut Unfair Trade Practices Act ("CUPTA"). As such, plaintiff's actions certainly manifest to this court, even if not to defendants, its intention to terminate the lease with Sovereign and sue for consequential damages, CUPTA violations, and tortious interference. Accordingly, defendants argument is without merit and is disregarded for purposes of this opinion.
As plaintiff has proven that defendants willfully breached the lease and are jointly and severally liable for damages, the court must determine the appropriate measure of damages to award plaintiff other than the loss of rent. Generally, the measure of damages for a breach of contract is the actual loss sustained by reason of the breach, which is the monetary value of what the promisee would have made if the contract had been performed, less the proper deductions. 22 Am.Jur.2d, Damages § 45; Rowan Construction Corp. v. Hassane, 17 Conn.App. 71, 80, 549 A.2d 1085, 1089 (1988).
Normally, the damages award is designed to place the injured party in the same position in which he would have been had the contract been performed. West Haven Sound Development Corp. v. West Haven, 201 Conn. 305, 319, 514 A.2d 734, 742 (1986); Steeltech Building Products, Inc. v. Edward Sutt Associates, Inc., 18 Conn.App. 469, 472, 559 A.2d 228, 230 (1989). However, consequential damages which would have been reasonably foreseeable at the time the agreement is made are also recoverable. See, L.F. Pace & Sons, Inc. v. The Travelers Indemnity Company, 9 Conn.App. 30, 40, 514 A.2d 766, 772, cert. denied, 201 Conn. 811, 516 A.2d 886 (1986) (...
To continue reading
Request your trial
-
Garrison v. Target Corp.
...has a separate pre-judgment interest statute in addition to the offer-of-judgment statute. See Boulevard Assocs. v. Sovereign Hotels, Inc. , 861 F. Supp. 1132, 1141 (D. Conn. 1994), supplemented on other grounds by 868 F. Supp. 70 (S.D.N.Y. 1994) ("Unlike § 37–3a (prejudgment interest), an ......
-
Ulbrich v. Groth
...decide the amount of the award. They cite no authority, however, for that proposition. 64. See also Boulevard Associates v. Sovereign Hotels, Inc., 861 F.Supp. 1132, 1139 (D.Conn.1994) (“[o]nce deterrence rather than compensation becomes the focus of CUTPA punitive damages ... then the fina......
-
Bristol Technology, Inc. v. Microsoft Corp.
...1998 WL 182563, at *10 (D.Conn. Apr.15, 1998) (citations and internal quotation marks omitted) (quoting Boulevard Assocs. v. Sovereign Hotels, Inc., 861 F.Supp. 1132, 1139 (D.Conn.1994)).32 Similarly, in a well-reasoned decision, a Connecticut trial court has held that a defendant's financi......
-
Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc.
...Design Associates, Inc., 937 F.2d 840, 845 (2d Cir.1991) (award under § 52-192a "punitive" in nature); Boulevard Associates v. Sovereign Hotels, Inc., 861 F.Supp. 1132, 1141 (D.Conn.1994) (award under § 52-192a "punitive in nature"); Murphy v. Marmon Group, Inc., 562 F.Supp. 856, 859 (D.Con......
-
Offers of Compromise in Civil Actions in Connecticut: Excessively Punitive and Disparate Sanctions
...A.2d 49 (1968). [27] Frenette v. Vickery, 522 F. Supp. 1098, 1100 (D.Conn. 1981). See also Boulevard Associates v. Sovereign Hotels, 861 F. Supp. 1132, 1141 (D.Conn. 1994), rev'd on other grounds, 72 F.3d 1029 (2d Cir. 1995) and Garcia v. Law Offices of Howard Lee Schiff, P.C., Docket No. 3......