Orange Improvements Partnership v. Cardo, Inc.

• Decision Date: 06 November 1997
• Docket Number: No. 3:97 CV 661(GLG).,3:97 CV 661(GLG).
• Citation: 984 F.Supp. 85
• Court: U.S. District Court — District of Connecticut
• Parties: ORANGE IMPROVEMENTS PARTNERSHIP, Plaintiff, v. CARDO, INC., Defendant.

984 F.Supp. 85

ORANGE IMPROVEMENTS PARTNERSHIP, Plaintiff, v. CARDO, INC., Defendant.

No. 3:97 CV 661(GLG).

United States District Court, D. Connecticut.

November 6, 1997.

COPYRIGHT MATERIAL OMITTED

John K. Atticks, III, Marlowe, Snow & Atticks, Madison, CT, for Plaintiff.

John J.L. Chobor, Greenberg, Hurwitz, Cooper & Silverman P.C., New Haven, CT, for Defendant.

OPINION

GOETTEL, District Judge.

Pursuant to Federal Rule of Civil Procedure 56, plaintiff Orange Improvements Partnership moves for summary judgment on the issue of the liability of defendant, Cardo, Inc. For the reasons discussed below, plaintiff's motion (Document # 12) is DENIED.

BACKGROUND

Plaintiff, Orange Improvements Partnership ("Orange Improvements"), owns a shopping center in Orange, Connecticut known as the Orange Promenade Center (the "Center"). Orange Improvements leases a portion of the premises to defendant, Cardo, Inc. ("Cardo"), in which Cardo has operated a package and liquor store for over thirty years. Cardo originally entered into a lease agreement in 1965 (the "1965 Lease") for its package and liquor store with Orange Improvements' predecessor, Whiteacre-Orange Associates ("Whiteacre-Orange"). Since the 1965 Lease, the Center's ownership has changed hands twice until Orange Improvements assumed ownership on April 30, 1993. When Orange Improvements became the Center's owner, it obtained all of its predecessors' rights, duties, and obligations to the original lease agreements with all the Center's lessees. Orange Improvements currently employs DLC Management Corp. (the "Management Company") to manage the Center.

Under the terms of the 1965 Lease, Cardo paid a minimum annual rent of $7,584.00. Additionally, Cardo was required to pay an additional percentage rental based upon its gross sales in excess of $250,000.00. The relevant portion of Article IV of the 1965 Lease provides:

Tenant agrees to pay to Landlord ... rent at the following rates and times: ....

(b) Additional percentage rental as follows:

An amount equal to 5 per centum of the total of all gross sales made by the Tenant in, on or from the demised premises during the lease year next preceding in excess of $250,000.00.

The term "gross sales" is defined as:

all receipts from sales made or services rendered in, on or from the demised premises, whether for cash or on credit, and all compensation received for orders taken on the demised premises. less all discounts and allowances to customers, and refunds and credits to customers for merchandise returned or exchanged, and less the amounts of any sales, luxury or excise taxes, so-called, collected by Tenant....

As of 1965, Cardo's gross sales included receipts from liquor, beer, and soda sales.

On February 25, 1967, Whiteacre-Orange wrote to Cardo in order to modify the 1965 Lease (the "1967 Letter") with respect to the provision on additional percentage rent. The relevant portion of the 1967 Letter provides:

It is true that I had promised you that Stop and Shop would carry no liquor or beer in the shopping center. However, their lease was signed before yours.

In consideration of the fact that they are carrying beer, we will exclude beer and soda from overage percentage rent.

According to this letter, Whiteacre-Orange and Cardo calculated the amount of additional percentage rent based on Cardo's receipts from its liquor sales only, and excluded receipts from its beer and soda sales. On April 21, 1976, the 1967 Letter was recorded with the 1965 Lease in the Orange Land Records in volume 255 at page 533 and volume 255 at page 506, respectively.

The consideration stated for the exclusion of beer and soda sales was the existing competition from Stop and Shop. Stop and Shop subsequently vacated the Center in 1989. Orange Improvements asserts that since Stop and Shop left, no other tenant competes with Cardo by selling beer and soda for off-premises consumption in the regular course of business.

In 1990, Cardo negotiated a modification of the 1965 Lease ("1990 Lease Modification") with one of Orange Improvements' predecessors, Orange White Acres, Inc. ("Orange White Acres"). As part of Orange White Acres' plan to improve the Center, Cardo's leased premises were renovated, improved, and enlarged. The 1990 Lease Modification therefore modified provisions of the 1965 Lease relating to the definition of the demised premises, the amount of annual minimum rent, and the amount of insurance that Cardo was required to carry.

During the construction period, the parties agreed, inter alia, to modify the rent provision due to the need to temporarily relocate Cardo's package store. The rent provision stated that "`additional percentage rental' as set forth in Article IV(b) [of the 1965 Lease] shall continue to be due and payable in accordance with said Lease." The 1990 Lease Modification defines the term "lease" as a certain lease agreement entered into on May 14, 1965 between Cardo and Whiteacre-Orange.

Upon termination of the construction period, the parties agreed to modify and amend the 1965 Lease, inter alia, in order to increase the amount of the minimum annual rent. According to the modified provision, Cardo agreed to pay a minimum annual rent of $13,704.00. Finally, the penultimate paragraph of the 1990 Lease Modification provides that "[a]ll of the terms and conditions of the [1965] Lease ... not ... modified and amended above shall remain in full force and effect as if restated herein in all of its parts...." The 1990 Lease Modification does not make any reference to the 1967 Letter. Moreover, the definition of the term "lease," as the 1965 Lease, makes no reference to the modification in the 1967 Letter.

After Orange Improvements became the Center's owner in 1993, Cardo continued paying rent according to the terms of the 1965 Lease as modified by the 1967 Letter. While Orange White Acres was lessor from 1990-93, it never requested additional percentage rent based on Cardo's beer and soda sales. Instead, Orange White Acres accepted the override based only on Cardo's liquor sales. According to Orange Improvements, Cardo has accounted to it for all of Cardo's gross sales, including beer and soda sales, since 1993. Each month, Cardo would pay its minimum monthly rent and annually, it would separately pay an amount for the additional percentage rent.

Orange Improvements asserts that it conducted a review of the Center's lease documents in the winter of 1996-97 at which time it determined that Cardo had not paid additional percentage rent on its beer and soda sales. On February 11, 1997, Orange Improvements made a demand upon Cardo to pay additional percentage rent based on the sale of liquor, beer, and soda. Accordingly, it presented a bill to Cardo in the amount of $87,236.00 for past due additional percentage rent based on Cardo's receipts from beer and soda sales for the period from April 1993 through December 1996.

In a supplemental agreement dated October 13, 1966, the term of the 1965 Lease was set for a twenty year period to expire on October 31, 1986. On February 19, 1986 Hyman Gluck, Cardo's then-president, exercised Cardo's option to extend the 1965 Lease for a further term of five years with a termination date of October 31, 1991. In a letter dated May 25, 1991, Gluck again exercised Cardo's option to extend the termination date for a five year period until February 27, 1997. Cardo's current president, Robert Wardle, wrote to the Management Company on July 23, 1996 in order to exercise Cardo's option to extend the lease for another five year period to expire on February 27, 2002. In the 1991 and 1996 extension letters, Cardo's presidents refer to the lease dated May 14, 1965 and the supplemental agreements dated October 13, 1966 and September 6, 1990. They do not mention the 1967 Letter as having modified the 1965 Lease.

Orange Improvements commenced this action on April 8, 1997, as amended on April 24, 1997, after Cardo did not pay the $87,236.00 bill for additional percentage rent based on its beer and soda sales. In its amended complaint, Orange Improvements seeks money damages, an accounting, reasonable attorney's fees in accordance with the lease, and other such relief as to which law or equity may pertain. In particular, Orange Improvements claims that Cardo is "indebted to [it] for an amount equal to five percent of [Cardo's] sales of beer and liquor [sic, soda?] from April 30, 1993 to and including the lease year last ending." Orange Improvements then made this motion for summary judgment on August 25, 1997 on the issue of Cardo's liability.

DISCUSSION

Summary judgment is appropriate only if the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show that there is no genuine issue of material fact. Fed.R.Civ.P. 56(c). When ruling on a summary judgment motion, a court must construe the facts in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Orange Improvement bears the burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). If there is no genuine issue of material fact, the moving party is entitled to summary judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

In an action involving contract interpretation, summary judgment is appropriate only when the terms of the agreement are wholly unambiguous, Heyman v. Commerce and Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975), considering the surrounding circumstances and undisputed evidence of intent. Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 230 (2d Cir.1995). Contractual language is unambiguous if it has "`a definite and precise meaning, unattended by danger of misconception in the purport of the [contract]...