Lavin v. Emery Air Freight Corp.

• Court: U.S. District Court — District of Connecticut
• Writing for the Court: Fitzsimmons
• Citation: Lavin v. Emery Air Freight Corp., 980 F.Supp. 93 (D. Conn. 1997)
• Decision Date: 03 April 1997
• Docket Number: Civ. No. 5:92CV636 HBF.
• Parties: Judith P. LAVIN, Marcelino E. Lavin and the Prudential Insurance Company of America, v. EMERY AIR FREIGHT CORP.

980 F.Supp. 93

Judith P. LAVIN, Marcelino E. Lavin and the Prudential Insurance Company of America, v. EMERY AIR FREIGHT CORP.

Civ. No. 5:92CV636 HBF.

United States District Court, D. Connecticut.

April 3, 1997.

COPYRIGHT MATERIAL OMITTED

John W. Cannavino, Steven I. Frenkel, Cummings & Lockwood, Stamford, CT, Robert M. Fleischer, Mark Randolph Jacobs, Jacobs Goldman, Norwalk, CT, Matthew J. Forstadt, Steven M. Frederick, Wofsey, Rosen, Kweskin & Kuriansky, Stamford, CT, Gary Scott Klein, Benanti & Associates, Stamford, CT.

Matthew C. Mason, Gregory & Adams, Wilton, CT, Leslie C. Storm, Zeisler & Zeisler, P.C., Bridgeport, CT, Carol K. Young, Schatz & Schatz, Ribicoff & Kotkin, Stamford, CT,

CORRECTED RULING ON POST-TRIAL MOTIONS

FITZSIMMONS, United States Magistrate Judge.

This is a diversity action on a commercial lease brought against tenant Emery Air Freight to recover unpaid rent dating from August, 1992. The leased premises was Emery's former corporate headquarters in Wilton, Connecticut. Emery asserted sixteen affirmative defenses to plaintiffs' claim for breach of lease. A jury trial was held in this matter beginning on July 25 and the case was submitted to a jury on August 2, 1995.

At the close of the evidence, and before the case was submitted to the jury, plaintiffs moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a).¹ The Court reserved decision on the motion, and submitted the case to the jury. A briefing schedule was set after the jury returned its verdict. The parties filed simultaneous briefs consistent with this Court's scheduling order.²

STIPULATIONS OF FACT

On or about December 28, 1966, Emery entered into a Lease Agreement (the "original lease") with Ralph M. Piersall and Judith P. Lavin for an 87,000 square foot office building located at 15 Old Danbury Road in Wilton, Connecticut. [Joint Trial Memorandum, Subsection 5 Joint Stipulation of Fact [Doc. # 118] (hereafter "Stip.") at ¶¶ 1 and 8]. This lease was modified on November 28, 1967, and again on November 29, 1967. Id. at ¶¶ 2-3. On April 18, 1967, the Town of Wilton building inspector issued a Certificate of Occupancy, which stated that the "requirements of the Building Code and the Zoning Regulations of the Town of Wilton" had been "satisfied." Id. At ¶ 37.

In 1981, a new addition was constructed. [Id. at ¶ 9]. In connection with the new addition, Judith P. Lavin and Marcelino E. Lavin (the "landlords") and Emery (the "tenant") entered into a Lease Agreement dated October 1, 1981 (the "Lease"), which superseded the original lease. [Id. at ¶ 4, Pl.Ex. 1]. On October 13, 1981, Daniel J. McCauley, Vice President and General Counsel to Emery, wrote the Knights of Columbus stating

On behalf of Emery Air Freight Corporation, I hereby certify to you that the building and all improvements located on the premises at 15 Old Danbury Road, Wilton, Connecticut which Emery Air Freight Corporation leases from Marcelino E. and Judith P. Lavin, and will be covered by your $3,500,000 mortgage, have been completed in accordance with the plans and specifications approved by Emery Air Freight Corporation. Emery Air Freight Corporation has accepted the premises.

[Pl.Ex. 13].

Modifications to the 1981 Lease were made on November 1, 1988, and on March 24, 1989. [Stip. at ¶¶ 6-7, Pl.Ex. 2, 3]. The Lease, as modified, contains a stated term to November 30, 2001. [Stip. at ¶ 5]. Under the terms of the lease, Emery is to pay rent to the Lavins on the first day of each month. Id. at ¶ 31.

On September 14, 1989, the Lavins entered into a Mortgage and Security Agreement with the Prudential Insurance Company of America to secure a Promissory Note in the principal amount of $11,500,000.00 made payable to Prudential. [Stip. at ¶¶ 26-27, Pl.Ex. 6]. Prudential took a first mortgage on the leased premises as security for the loan. In conjunction with the execution of the Mortgage, a Non-Disturbance Agreement dated September 13, 1989 was executed by Emery, the Lavins, and Prudential. [Stip. at ¶ 21, Pl.Ex. 4]. Emery also executed a Tenant's Estoppel Certificate dated September 13, 1989, which states in part,

Lessee (Emery) asserts no claim of default or offset or right to abate rent or defense against the payment of rent or other charges payable by Lessee and asserts no claim against Lessor (Lavins) under the Lease in regard to the premises occupied by Lessee.

Id. at ¶¶ 22-23, Pl.Ex. 5. The Estoppel Certificate further provides that "the improvements and space required to be furnished according to the Lease have been duly delivered by Lessor (Lavins) and accepted by Lessee (Emery)." [Stip. at ¶ 25, Pl.Ex. 5].

Consolidated Freightways, Inc. acquired Emery in April, 1989. [Def. Ex. 522, 536]. Emery continued to occupy the premises until the summer of 1992, when Emery relocated its offices and employees to Portland, Oregon, because of its acquisition by Consolidated. [Stip. at ¶ 34, Pl.Ex. 20]. In May, 1991, Emery counsel, Roy Truelson sent the Lavins a form letter, addressed to "Property Owner" and entitled "Excess Leased Facility." [Pl.Ex. 14]. It stated that, due to reduction "in the size of [Emery's] operation in response to continuing recessionary and cost pressures," the company headquarters in Wilton, Connecticut "is in the process of closing and the administration and disposal of excess properties has been transferred to this office." [Pl.Ex. 14]. The letter further stated that, "Emery has no use for the facility leased from you."³ Id. Emery stopped making Lease payments in August, 1992. [Stip. at ¶ 34].

On September 30, 1992, the Lavins brought this action against Emery, seeking unpaid rent with appropriate interest thereon, together with costs, disbursements and reasonable attorney's fees. Id. at 32.

By November, 1992, Emery had removed its remaining personnel from the premises, leaving the building unoccupied. Id. at ¶ 35.

On December 2, 1992, defendant's counsel engaged Philip Helmes of Peterson Consulting Limited Partnership to perform a "property evaluation in regard to potential violations and strategy development for lease termination." [Helmes Depo. at 76, Doc. # 102, Ex. L].

No government official has given notice "(1) prohibiting occupancy of the building; or (2) stating that the Property violated or violates any law, code or ordinance." [Stip. at ¶ 37].

JURY'S FINDINGS OF FACT: Plaintiff's Claim

The jury found that:

1. Plaintiffs proved by a preponderance of the evidence that a contract was formed between Emery and the Lavins.

2. Plaintiffs proved by a preponderance of the evidence that the contract was supported by consideration.

3. Plaintiffs proved by a preponderance of the evidence that Emery breached the lease by failing to do what it promised.

4. Plaintiffs proved by a preponderance of the evidence that Emery (1) abandoned, vacated or deserted the premises; (2) failed to pay rent; (3) failed to pay taxes; (4) failed to pay sewer use charges; and (5) failed to pay sewer assessment fees.

5. Plaintiffs proved by a preponderance of the evidence that Emery's breach caused the Lavins to suffer damages.

6. The jury found that the Lavins were entitled to attorney's fees under the lease and damages for (1) unpaid rent in the amount of $5,572,609.17, (2) unpaid property taxes in the amount of $390,656.11, (3) unpaid sewer use charges in the amount of $9,890.53, (4) unpaid sewer assessment fees in the amount of $16,530.90, and (5) interest on unpaid rent in the amount of $838,746.81.

CONCLUSIONS OF LAW

Before the Court are the parties' cross motions for decision on Emery's affirmative defenses. It is undisputed that Emery need only prevail on one of its many affirmative defenses to prevail in this action.⁴ Plaintiffs argue that they are entitled to Judgment as a Matter of Law on each and every affirmative defense because (1) the doctrine of independent covenants prevents Emery from prevailing on its affirmative defenses; (2) Emery's affirmative defenses fail because Emery did not avail itself of the remedies prescribed in the lease; (3) Emery's affirmative defenses are legally untenable because of its failure to give Prudential notice and an opportunity to cure any alleged breach by the Lavins as required under the attornment agreement; and (4) Emery's execution of the tenant's estoppel certificate precludes it from recovering on any of its affirmative defenses.⁵

At trial, the Court reserved ruling on the remaining affirmative defenses and a verdict form containing thirty interrogatories was submitted to the jury. The interrogatories on Emery's affirmative defenses were submitted to assist the Court "in some of the matters that are questions of law." [8/2/95 Tr. at 45]. The Court stated, "what I'm going to do is I'm going to ask the jury for a factual determination and take up the legal import of the factual determinations after I see what they decide." [8/2/95 Tr. at 54].

The Court submitted instructions and twenty-three interrogatories to the jury on the affirmative defenses of (1) intentional reckless and negligent misrepresentation,⁶ (2) breach of warranty,⁷ (3) breach of duty of good faith and fair dealing,⁸ (4) unconscionability,⁹ (5) commercial impracticability,¹⁰ and (6) constructive eviction.¹¹

Under ordinary circumstances, the Court would first rule on the affirmative defenses that were presented to the Court solely as questions of law, and then consider the factual findings of the jury in light of the law on the remaining affirmative defenses. However, because the defendant has argued all of the affirmative defenses with reference to the jury's answers to interrogatories, and has drawn legal conclusions from those answers which the Court believes are inaccurate or not consistent with the jury's findings, the Court will address the import of the jury's findings first and then analyze the affirmative defenses in light of the applicable law and the jury's conclusions where relevant.

Effect of...