Rokalor, Inc. v. Connecticut Eating Enterprises, Inc.

• Decision Date: 16 May 1989
• Docket Number: No. 6652,6652
• Citation: 558 A.2d 265,18 Conn.App. 384
• Parties: ROKALOR, INC. v. CONNECTICUT EATING ENTERPRISES, INC., et al.
• Court: Connecticut Court of Appeals

Page 265

558 A.2d 265

18 Conn.App. 384

ROKALOR, INC. v. CONNECTICUT EATING ENTERPRISES, INC., et al.

No. 6652.

Appellate Court of Connecticut.

Argued Dec. 14, 1988.

Decided May 16, 1989.

Timothy S. Hollister, Hartford, for appellant-appellee (plaintiff).

M. Katherine Webster-O'Keefe, with whom, on the brief, was Vincent P. McCarthy, New Milford, for appellee-appellant (defendant Anthony Cerruto).

Before DUPONT, C.J., and EDWARD Y. O'CONNELL and FOTI, JJ.

FOTI, Judge.

The plaintiff appeals and the defendant ¹ Anthony Cerruto cross appeals from the judgment rendered by the trial court awarding the plaintiff damages for the defendants' breach of a commercial lease.

The plaintiff claims that the trial court erred (1) in denying a substantial portion of its claim for posteviction losses of rental income, and (2) in denying its claim for expenses. In the defendant's cross appeal, he claims that the trial court erred in awarding the plaintiff posteviction damages. We find error on the plaintiff's second claim and no error on the cross appeal.

The trial court found the following facts. On May 16, 1985, the parties entered into a lease agreement under which the defendant agreed to lease the plaintiff's commercial property for a three year term beginning on June 24, 1985. According to the lease, the defendant agreed to pay the plaintiff a monthly rent of $3400 for the first year, $3700 per month for the second year and $3850 per month for the third year. The lease further obligated the defendant to pay the real estate taxes, water and sewer charges, fire district taxes, and any maintenance charges. Under the lease, the defendant was to pay these expenses "within fifteen (15) days after presentation to the lessee of the bill for same." ² With respect to assignment, the lease provided: "No assignment of this lease by Lessee shall release the lessee of his obligations under this lease."

On June 4, 1985, the defendant assigned his interest in the lease to Connecticut Eating Enterprises, Inc. (Eating Enterprises). Beginning August 1, 1986, the defendant's assignee stopped paying rent. In September, 1986, Eating Enterprises vacated the premises and neither the defendant nor his assignee paid any further amounts under the terms of the lease. In November, 1986, the plaintiff obtained a judgment of possession of the premises after a summary process proceeding.

On March 12, 1987, the plaintiff executed a two year lease with a new tenant, effective May 1, 1987. The lease obligated the tenant to pay rent in the amount of $2800 per month for the first year, and $3400 per month for the second year.

The parties stipulated that the defendant was liable for breaching the lease and agreed to a hearing on damages only. At the hearing, the parties further stipulated that prior to the summary process judgment the defendant was liable for damages in the amount of $12,787.49. At the hearing, the parties focused on damages occurring after the summary process judgment was rendered, including posteviction rent, a real estate broker's commission, tax claims, and attorney's fees.

The trial court awarded the plaintiff $11,100 in posteviction damages representing three of the six months of lost rental income, but denied the plaintiff's claim for additional damages for lost and diminished rent finding that the plaintiff had failed to make reasonable efforts to mitigate its damages. In addition, the trial court denied the plaintiff's claim for expenses finding that the plaintiff had failed to present the bills for such expenses to the defendant as required by the terms of the lease.

The plaintiff's first claim is that the trial court erred in denying it rent for three of the six months between the date the defendant was evicted and the beginning of the successor tenant's lease term, and for the difference between the rental amounts in the old and the new leases. In his cross appeal, the defendant claims that the plaintiff was not entitled to any posteviction damages. In light of the nature of the defendant's claim, we must first address the defendant's cross appeal before turning to the plaintiff's claims.

The defendant argues, in essence, that the plaintiff, by exercising its right under General Statutes § 47a-23 ³ to sue for possession of the premises, waived its right to recover damages that it incurred after the entry of a judgment of possession. We disagree.

When the lessee breaches a lease for commercial property, the lessor has two options: (1) to terminate the tenancy; or (2) to refuse to accept the surrender. Sagamore Corporation v. Willcutt, 120 Conn. 315, 317-18, 180 A. 464 (1935); Dewart Building Partnership v. Union Trust Co., 4 Conn.App. 683, 687, 496 A.2d 241 (1985). Where the landlord elects to continue the tenancy, he may sue to recover the rent due under the terms of the lease. Under this course of action, the landlord is under no duty to mitigate damages. Dewart Building Partnership v. Union Trust Co., supra. When the landlord elects to terminate the tenancy, however, the action is one for breach of contract; Sagamore Corporation v. Willcutt, supra; and, when the tenancy is terminated, the landlord is obliged to mitigate his damages. Dewart Building Partnership v. Union Trust Co., supra. When the tenancy ends, the tenant is released from his obligations under the lease and is, therefore, no longer obliged to pay rent. Feneck v. Nowakowski, 146 Conn. 434, 436, 151 A.2d 891 (1959).

The defendant relies on Feneck v. Nowakowski, supra, for the proposition that because the plaintiff opted to terminate the tenancy, his obligation to pay rent was discharged and, therefore, he cannot be liable to pay rent due after the judgment of possession was rendered. The defendant's reliance on Feneck is misplaced. Although the termination of the tenancy releases a tenant from his obligations under the lease, such release does not leave the landlord without legal recourse to recover damages. Where a landlord, as in this case, elects to terminate the tenancy and to regain possession of the premises, although he cannot institute an action for rent due under the lease, he may sue for a breach of the lease. Where the action is one for breach of the lease, basic contract principles apply.

As the trial court correctly concluded: "A lease is nothing more than a contract. Robinson v. Weitz, 171 Conn. 545, 551, [370 A.2d 1066 (1976) ]. Thus, as in any other contract action the measure of damages is that the award should place the injured party in the same position as he would have been in had the contract been fully performed. Lar-Rob Bus Corporation v. Fairfield, 170 Conn. 397, 404-405, [365 A.2d 1086 (1976) ]. As a consequence, the unpaid rent, while not recoverable as such, may be used by the court in computing the losses suffered by the plaintiff by reason of the defendant's breach of contract of lease. The plaintiff would be entitled to recover the damages which would naturally follow from such a breach. Sagamore Corporation v. Willcutt, [supra, [120 Conn. at], 320 ]." See also Danpar Associates v. Somersville Mills Sales Room, Inc., 182 Conn. 444, 445-46, 438 A.2d 708 (1980); 49 Am.Jur.2d, Landlord and Tenant § 183. We conclude that the trial court correctly determined that, in an action for breach of a lease, the amount of rent agreed to by the parties is a proper measure of damages. There is, therefore, no error on the defendant's cross appeal.

Having determined that the plaintiff's suit for posteviction damages under a breach of contract theory is actionable, we turn to the plaintiff's first claim on appeal that the trial court erred in finding that it failed fully to mitigate its damages. We find no error.

It is well established that in an action for damages for breach of a lease, the injured party is under a duty to mitigate his or her damages. Danpar Associates v. Somersville Mills Sales Rooms, Inc., supra, 446, 438 A.2d 708. The duty to mitigate requires a landlord to "make reasonable efforts" to minimize damages; id.; which includes taking steps to relet the premises. What constitutes reasonable efforts is a question of fact for the trier. Id. We will not reverse the findings of the trial court unless we conclude they are clearly erroneous. Practice Book § 4185; Gallicchio Bros., Inc. v. C & S Oil Co., 191 Conn. 104, 107, 463 A.2d 600 (1983); Elliott v. Estate of Nellie Galaske, 17 Conn.App. 823, 824, 552 A.2d 1225 (1989). The trial court's findings of fact are clearly set forth in an exhaustive and well reasoned memorandum of decision.

In determining that the plaintiff failed to mitigate some of its claimed damages, the trial court found the following acts or omissions determinative. First, the trial court found that the plaintiff did not hire a real estate broker until almost four months after the defendant's default and provided no explanation for this delay. The trial court found that this unexplained delay was unreasonable. In addition, the plaintiff did not introduce any evidence by the broker to establish what efforts were made by him to lease the premises. Further, the trial court found that the unexplained decrease in the rental value of the property was unreasonable in view of the fact that there was evidence presented that established that the value of the property had increased. We conclude, on the basis of these factors, that the trial court's finding that the plaintiff failed to make reasonable efforts to mitigate its damages was well within its discretion.

The plaintiff's second claim is that ...