Conference Center Ltd. v. TRC-The Research Corp. of New England

• Decision Date: 08 February 1983
• Docket Number: TRC--THE
• Citation: 189 Conn. 212,455 A.2d 857
• Court: Connecticut Supreme Court
• Parties: CONFERENCE CENTER LIMITED v.RESEARCH CORPORATION OF NEW ENGLAND.

Page 857

455 A.2d 857

189 Conn. 212

CONFERENCE CENTER LIMITED v. TRC--THE RESEARCH CORPORATION OF NEW ENGLAND.

Supreme Court of Connecticut.

Argued Nov. 8, 1982.

Decided Feb. 8, 1983.

George A. Dagon, Jr., East Hartford, for appellant (plaintiff).

Alan R. Baker, Hartford, with whom, on the brief, were Edwin G. Hebb, Jr., and Michael L. Roy, Hartford, for appellee (defendant).

Before SPEZIALE, C.J., PETERS, ARTHUR H. HEALEY, SHEA and GRILLO, JJ.

PETERS, Associate Justice.

The issue in this case is whether a tenant has been constructively evicted when served with a demand for immediate possession by a mortgagee initiating foreclosure proceedings against the tenant's landlord. The plaintiff, Conference Center Limited, brought an action against its tenant, the defendant TRC--The Research Corporation of New England, seeking damages for the defendant's allegedly wrongful abandonment of the leasehold premises. The defendant, in its reply, raised a number of special defenses based upon the foreclosure action brought by Hartford Federal Savings and Loan Association against Conference Center Limited. The trial court, after a hearing, granted the defendant's motion for summary judgment and the plaintiff has appealed.

The underlying facts are established in the pleadings of the parties and in two memoranda of decision by the trial court, one by Wright, J., sustaining the defendant's objections to the plaintiff's motion to strike the defendant's first, second and third defenses, and one by O'Donnell, J., granting the defendant's motion for summary judgment on these three special defenses. No issue has been taken on this appeal with any of the facts thus established.

The plaintiff, Conference Center Limited (hereinafter CCL) and the defendant, TRC--The Research Corporation of New England (hereinafter TRC) entered into a two-year commercial lease on July 7, 1977. The tenant, TRC, took possession of the premises on September 12, 1977.

The leasehold premises were subject to a prior mortgage executed on May 5, 1972, by the plaintiff's predecessor in title to the Hartford Federal Savings and Loan Association (hereinafter the Bank), and duly recorded. On January 19, 1978, when the plaintiff had been in default on the mortgage for many months, the Bank initiated foreclosure proceedings. In that action, the Bank served the defendant with a demand for immediate possession of the leasehold premises. Thereafter, on February 27, 1978, the defendant vacated the premises and returned the keys thereto to the plaintiff. This litigation ensued.

In response to the plaintiff's complaint seeking damages arising out of the defendant's alleged breach of its leasehold contract, the defendant filed both an answer denying breach and several special defenses. The first three of these special defenses grew out of the foreclosure action and maintained that the foreclosure proceedings had resulted in: (1) a termination of the lease; (2) a breach of the covenant of quiet enjoyment in the lease; and (3) a constructive eviction. The plaintiff filed a motion to strike these defenses. ¹ The trial court, Wright, J., in sustaining the defendant's objections to the motion to strike, treated these three special defenses jointly and focused primarily upon the claim of constructive eviction. The court held that "[i]n yielding possession upon demand, defendant acted at its peril and assumes the burden of proving that the Bank's request was made under a paramount title .... Under these circumstances, the plaintiff's motion to strike the first, second and third special defenses is premature."

Some seven weeks after the pleadings had been closed, the defendant moved for summary judgment. In response, the plaintiff attempted belatedly to amend its reply to the defendant's special defenses. The proffered amendment sought to raise, by way of avoidance, the defendant's anticipatory determination to vacate the premises even before the foreclosure had begun, and the assurance given the defendant by the Bank that the defendant's possession would not actually be disturbed.

The trial court concluded that this amendment should be disallowed because it came too late. The court further concluded that, whether or not the amendment were allowed, there existed no genuine issue of material fact. Adopting the legal principles articulated in the memorandum of decision on the earlier motion to strike, the court granted the defendant's motion for summary judgment.

In its appeal from this judgment, the plaintiff CCL raises three issues: (1) the trial court erred in denying its motion to strike, since initiation of a foreclosure action by a mortgagee does not constitute a constructive eviction of the mortgagor's tenant; (2) the trial court erred in denying its motion to amend; and (3) the trial court erred in granting the motion of the defendant TRC for summary judgment, since there were unresolved issues of material fact. While we agree with the trial court that the motion to strike and the motion to amend were properly denied, we conclude that the court acted prematurely in granting the defendant's motion for summary judgment.

Because the issues raised by the motion to strike and the motion for summary judgment address various facets of the same underlying substantive question, they are most appropriately discussed jointly. The claimed error relating to refusal to permit amendment of the plaintiff's pleadings raises a separate procedural issue that we must resolve first, however, since its resolution has implications for the underlying substantive question.

I

When the defendant filed its motion for summary judgment on July 21, 1980, some seven weeks had passed since the pleadings had been closed by the plaintiff's "reply to special defenses and counterclaim," filed on June 2, 1980. On August 11, 1980, the day that the motion for summary judgment was set down for a hearing, the plaintiff filed its request to amend, its proposed amendment to its reply and its objection to the motion for summary judgment, to which was attached an affidavit raising questions of fact related to the subject matter of the proposed amendment. On this state of the record, the trial court concluded that the amendment had come too late and refused to permit it.

The law is well-settled that belated amendments to the pleadings rest in the sound discretion of the trial court. Practice Book § 176; Rahmati v. Mehri, 188 Conn. 583, 588, 452 A.2d 638 (1982); Lawson v. Godfried, 181 Conn. 214, 216-17, 435 A.2d 15 (1980). While a trial court may be well-advised to exercise leniency when amendments are proffered in response to a motion for summary judgment, rather than on the eve of trial, we have affirmed as discretionary the denial of permission to amend under such circumstances in Citizens National Bank v. Hubney, 182 Conn. 310, 313, 438 A.2d 430 (1980). Since, in this case also, there is no clear evidence of an abuse of discretion, there is no error in the court's ruling on the motion to amend.

We note, however, that the information which the plaintiff sought to bring to the attention of the court was contained not only in its motion to amend but also in its counteraffidavit contesting the defendant's motion for summary judgment. In order to effectuate its proper and timely opposition to summary judgment, the plaintiff was entitled, indeed obligated, to file an affidavit reciting evidentiary matter to establish the existence of a genuine issue as to a material fact. Practice Book §§ 380, 381; Plouffe v. New York, N.H. & H.R. Co., 160 Conn. 482, 490, 280 A.2d 359 (1971). We may therefore consider, as did the trial court, with regard to the motion for summary judgment, the relevant factual allegations contained in the plaintiff's affidavit of August 11, 1980. Citizens National Bank v. Hubney, 182 Conn. supra, 312, 438 A.2d 430. Since these allegations require the plaintiff to undertake the difficult challenge of providing evidence, in advance of trial, of the mental state of the defendant and of the Bank, the mortgagee, we are willing to take into account whatever relevant information the plaintiff was able to provide. See Batick v. Seymour, 186 Conn. 632, 645-46, 443 A.2d 471 (1982). As did the trial court, we therefore turn to the substantive question on the basis of all of the evidence proffered by both parties.

II

This court has not previously ruled on the effect that a paramount mortgagee's institution of foreclosure proceedings has on rights and liabilities under a subsequent, and hence subordinate, lease. To resolve this issue, we must take account of three convergent areas of the law: under mortgage law, the right of a mortgagee in a "title" jurisdiction to possession of mortgaged premises; under landlord-tenant law, the right of a tenant to enforce a covenant of quiet enjoyment; and under commercial law, the right of a contracting party to adequate assurance of receiving due performance.

It is undisputed that a mortgagee in Connecticut, both by common-law rule and by statute, is deemed to have taken legal title upon the execution of a mortgage on real property. General Statutes § 47-36h; State v. Stonybrook, Inc., 149 Conn. 492, 496, 181 A.2d 601, appeal dismissed, cert. denied, 371 U.S. 185, 83 S.Ct. 265, 9 L.Ed.2d 227 (1962); Leonard v. Bailwitz, 148 Conn. 8, 12, 166 A.2d 451 (1960); City Lumber Co. of Bridgeport, Inc. v. Murphy, 120 Conn. 16, 19, 179 A. 339 (1935); Hartford Realization Co. v. Travelers Insurance Co., 117 Conn. 218, 224, 167 A. 728 (1933); Desiderio v. Iadonisi, 115 Conn. 652, 654, 163 A. 254 (1932); McKelvey v. Creevey, 72 Conn. 464, 467, 45 A. 4 (1900); Chamberlain v. Thompson, 10 Conn. 243, 251 (1834). As a titleholder, in the absence of an agreement to the contrary, the mortgagee has a right to immediate possession against its mortgagor; Hartford Realization Co. v. Travelers Insurance Co., supra; Desiderio v. Iadonisi, supra; Chamberlain v. Thompson, supr...