Putnam Park Associates v. Fahnestock and Company, Inc.

This is an appeal from a judgment awarding
$31,413.27 in liquidated damages to the plaintiff, Putnam
Park Associates, for breach of a written lease contract
by the defendant, Fahnestock and Company, Inc..
The trial court found that the defendant, who was the tenant under the lease, had breached its duty to pay
‘‘additional rent,'' over and above a base level of rent,
to cover certain variable ‘‘excess expenses.'' The defendant
claims that the trial court improperly (1) refused
to hold that the plaintiff's allegations in its complaint
were insufficient to sustain the judgment, (2) found that
the plaintiff had provided statements to the defendant
detailing the additional rent due within the time frame
required in the lease and (3) found that the statements
provided were certified in accordance with the provisions
of the lease. The plaintiff cross appeals from that
part of the court's judgment that denied the plaintiff's
request for interest, late charges and attorney's fees
and costs. The plaintiff claims that (1) the court's denial
of interest and late charges was clearly erroneous, and
(2) the trial court abused its discretion when it denied
the plaintiff's request for attorney's fees and costs. We
affirm that part of the judgment awarding damages for
the defendant's breach of the additional rent terms of
the lease. We reverse that part of the judgment denying
the plaintiff's request for interest, late charges and attorney's
fees and costs.

The following undisputed facts and procedural history
are relevant to our resolution of these appeals. The
defendant is a corporation that leased the second floor
of a commercial building from the plaintiff for a five
year term from November 25, 1987, through November
24, 1992. Pursuant to the written lease agreement for
a Wethersfield office building, the defendant agreed
to pay the lessor, the plaintiff, as additional rent its
proportional share of the cost of certain real estate
property taxes to the town of Wethersfield and certain
other operating expenses, all as more particularly set
forth in the rider to the lease agreement, which states
in relevant part as follows:

‘‘(d) (i) On or before March 1 of each calendar year
(or as soon thereafter as is practical), Landlord shall
deliver to Tenant a statement, certified by a partner of
Landlord, of Tenant's proportionate share of Excess
Expenses for the preceding year. If Tenant's proportionate
share of the actual Excess Expenses for the preceding
year exceeds the aggregate of the estimated monthly
payments made by Tenant during such year, Tenant
shall within ten (10) days of the receipt of such statement,
tender to Landlord an amount equal to such
excess as Additional Rent.''

This dispute arises because the plaintiff did not bill
the defendant until September of 1994 for the additional
rent for the years 1990, 1991 and 1992. The five year
lease between the parties had expired by its terms in
November of 1992.

In count one of its two count complaint, the plaintiff
claimed that for a period of three years, the defendant
breached its contractual duty to pay ‘‘additional rent''
to the plaintiff to cover variable ‘‘excess expenses,'' which included a share of the real estate taxes and
operating expenses of the real property subject to the
lease. The plaintiff's second count sounded in quantum
meruit and was not addressed by the court.

In its answer, the defendant denied any current obligation
to furnish the plaintiff with additional rent under
the lease. The defendant advanced several special
defenses. First, the defendant claimed that the plaintiff
failed to follow the procedures described in the lease
for obtaining additional rent. Specifically, paragraph (d)
(i) of the rider to the lease stated: ‘‘On or before March
1 of each calendar year (or as soon thereafter as is
practical), [the plaintiff] Landlord shall deliver to [the
defendant] Tenant a statement, certified by a partner
of Landlord, of Tenant's proportionate share of Excess
Expenses for the preceding year.'' The defendant
alleged that those procedures constituted a condition
precedent to recovering additional rent. The defendant
also claimed that the plaintiff waived its right to collect
additional rent and that it was barred from recovering
additional rent by the applicable statute of limitations
and the doctrine of laches. The defendant also claimed
that the plaintiff was not entitled to recover damages
under its second count, which sounded in quantum
meruit. Finally, the defendant alleged that it had surrendered
the leased premises in 1992 and that any obligation
to furnish additional rent terminated at that
time.1

The court found that the plaintiff's procedures for
billing additional rent did not constitute the failure of
a condition precedent to recovering additional rent.
Although the plaintiff did not provide statements detailing
the amount of additional rent due for the calendar
years 1990, 1991 and 1992 until September 12, 1994, the
court found that this delay was ‘‘commercially understandable.''
In its memorandum of decision, the court
found that the litigants had established ‘‘an atmosphere
in which late statements would be tolerated'' through
the course of the parties' performance. For the years
1989 and 1990, the defendant paid without objection
invoices for additional rent that were sent to the defendant
after the time permitted in the additional rent
provisions of the lease. The plaintiff alerted the defendant
that it had been embroiled in a dispute with its
mortgagee concerning the proper amount of additional
rent, which explained the delay in providing the statements.
The court also noted that the lease provisions
governing the procedure for obtaining additional rent
contained flexible language and that the lease did not
indicate that ‘‘time was of the essence.'' Paragraph (d)
(i) of the rider to the lease stated: ‘‘On or before March
1 of each calendar year (or as soon thereafter as is
practical), [the plaintiff] Landlord shall deliver to [the
defendant] Tenant a statement . . . .'' (Emphasis
added.) The court found that the plaintiff had sufficiently
performed its duty to provide certified statements because a partner of the plaintiff, P. Christopher
Henney, had ‘‘written and signed'' the letter accompanying
the statements.

The court awarded damages of $31,413.27, reflecting
the amount of additional rent originally invoiced to the
defendant for 1990, 1991 and 1992. The court did not
award any damages for interest, late charges or attorney's
fees and costs because it found that the defendant
had raised and proven equitable claims, including
laches, that should bar recovery of such damages. The
present appeal and cross appeal followed. Further facts
and procedural history will be set forth where necessary.

* * *

‘‘[O]ur resolution of the [plaintiff's] claim is guided
by the general principles governing the construction of
contracts. A contract must be construed to effectuate
the intent of the parties, which is determined from the
language used interpreted in the light of the situation
of the parties and the circumstances connected with
the transaction. . . . [T]he intent of the parties is to
be ascertained by a fair and reasonable construction
of the written words and . . . the language used must
be accorded its common, natural, and ordinary meaning
and usage where it can be sensibly applied to the subject
matter of the contract. . . . Where the language of the
contract is clear and unambiguous, the contract is to
be given effect according to its terms. . . . Lawson v.
Whitey's Frame Shop, 241 Conn. 678, 686, 697 A.2d 1137
(1997). Although ordinarily the question of contract
interpretation, being a question of the parties' intent,
is a question of fact . . . [w]here there is definitive
contract language, the determination of what the parties
intended by their contractual commitments is a question
of law. . . . Levine v. Massey, 232 Conn. 272, [277–
78], 654 A.2d 737 (1995); see Mulligan v. Rioux, 229
Conn. 716, 740, 643 A.2d 1226 (1994), on appeal after
remand, 38 Conn. App. 546, 662 A.2d 153 (1995); Bank
of Boston Connecticut v. Schlesinger, 220 Conn. 152, 158, 595 A.2d 872 (1991); Thompson & Peck, Inc. v.
Harbor Marine Contracting Corp., 203 Conn. 123, 131,
523 A.2d 1266 (1987); Bead Chain Mfg. Co. v. Saxton
Products, Inc., 183 Conn. 266, 274–75, 439 A.2d 314
(1981).'' (Internal quotation marks omitted.) Pesino v.
Atlantic Bank of New York, 244 Conn. 85, 91–92, 709
A.2d 540 (1998).

‘‘When . . . the trial court draws conclusions of law,
our review is plenary and we must decide whether its
conclusions are legally and logically correct . . . .
Practice Book § 4061 [now § 60-5]; United Illuminating
Co. v. Groppo, 220 Conn. 749, 752, 601 A.2d 1005 (1992);
Zachs v. Groppo, 207 Conn. 683, 689, 542 A.2d 1145
(1988); Pandolphe's Auto Parts, Inc. v. Manchester, 181
Conn. 217, 221–22, 435 A.2d 24 (1980). Morton Buildings,
Inc. v. Bannon, 222 Conn. 49, 53, 607 A.2d 424
(1992).'' (Internal quotation marks omitted.) Issler v.
Issler, 250 Conn. 226, 236, 737 A.2d 383 (1999). Under
the circumstances of this case, because the trial court
did not rely solely on the written agreement but took
into account the surrounding circumstances, we apply
the clearly erroneous standard to the court's factfinding.

* * *

‘‘Where no time for the performance of a contract is
contained within its terms, the law presumes that it is
to be performed within a reasonable time. Texas Co.
v. Crown Petroleum Corporation, 137 Conn. 217, 227,
75 A.2d 499 [1950]; Santoro v. Mack, 108 Conn. 683,
[689–90], 145 A. 273 [1929]. Benassi v. Harris, 147 Conn.
451, 458, 162 A.2d 521 (1960); see also Central New
Haven Development Corporation v. La Crepe, Inc., 177
Conn. 212, 216, 413 A.2d 840 (1979). What is a reasonable
length of time is ordinarily a question of fact for the
trier. International Tool&Gauge Co. v. Borg, 145 Conn.
644, 648, 145 A.2d 750 [1958]; Loomis v. Norman Printers
Supply Co., 81 Conn. 343, 347, 71 A. 358 [1908].
Parkway Trailer Sales, Inc. v. Wooldridge Bros., Inc.,
148 Conn. 21, 26, 166 A.2d 710 (1960). . . . Martin v.
Martin's News Service, Inc., 9 Conn. App. 304, 308–309,
518 A.2d 951 (1986), cert. denied, 202 Conn. 807, 520
A.2d 1287 (1987).'' (Internal quotation marks omitted.)
Schlicher v. Schwartz, 58 Conn. App. 80, 86, 752 A.2d
517 (2000).

‘‘The standard of review with respect to a court's
findings of fact is the clearly erroneous standard. The
trial court's findings are binding upon this court unless
they are clearly erroneous in light of the evidence and
the pleadings in the record as a whole. . . . We cannot
retry the facts or pass on the credibility of the witnesses.
. . . A finding of fact is clearly erroneous when there
is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite
and firm conviction that a mistake has been committed
. . . .'' United Components, Inc. v. Wdowiak, 239 Conn.
259, 263, 684 A.2d 693 (1996).'' (Internal quotation marks
omitted.) Schlicher v. Schwartz, supra, 58 Conn. App.
87.

* * *

The plaintiff has cross appealed, claiming that (1)
the trial court's decision to deny the plaintiff's request
for interest and late charges was clearly erroneous and
(2) that the trial court abused its discretion in denying
the plaintiff's request for attorney's fees and late
charges.

At the time of trial, the amount of interest claimed
was $13,570.53, and the total of late charges was
$1570.66.

On appeal, the plaintiff claims that court's failure to
award interest and penalties provided for in the lease
was contrary to §§ 33b and 5 of the lease and that
therefore the court's decision is clearly erroneous. It
seeks reversal of that decision and a remand to the
trial court for further proceedings to determine the
proper allowance.

* * *

The court held that ‘‘the defendant has raised several
equitable defenses, including laches, which is sufficient,
in view of all the circumstances, to negate the claims
of the plaintiff for interest, late charges and legal fees.''

The plaintiff in its cross appeal cites Pacelli Bros.
Transportation, Inc. v. Pacelli, 189 Conn. 401, 415, 456
A.2d 325 (1983). In Pacelli, the trial court gave no reason
for not awarding attorney's fees provided in a note
which was being collected by litigation, whereas here
the court did give reasons. We nonetheless conclude
that the reasoning in Pacelli is both persuasive and
pertinent because it rests on the concept of the legal
instrument's provisions being a whole of which the
interest and collection portions are an integral part. In
Pacelli, our Supreme Court stated: ‘‘We know of no
principle whereby the amount due upon a note which
has been found to be valid may be reduced because
of conduct of the holder which has been found to be
reprehensible but not violative of the legal rights of the
maker. The provision for a reasonable attorney's fee
was an integral part of the note and, like any other
clause determining the amount due, could not be disregarded.
Having decided that the note was valid, the [trial] court had no choice but to allow a reasonable
attorney's fee as part of the debt.'' Id. We agree with the
plaintiff that in light of the clear terms of the agreement,
once the court found that the plaintiff was entitled to
payment of the additional rent under the lease and that
the defendant had not been prejudiced in any way by
delay, reasonable attorney's fees, late charges running
from the date ten days after the September 12, 1994
date of the invoice and interest from that date were
due. As with the note in Pacelli, the phrases describing
the plaintiff's right to interest, attorney's fees and late
charges were an integral part of the lease instrument.5
If no award to reflect these liquidated damages were
made, the plaintiff would not be made whole.

* * *

Click the case caption above for the full text of the Court's opinion.

On the defendant’s appeal, the judgment is affirmed.
On the plaintiff’s cross appeal, the judgment is reversed
as to the refusal to award interest, attorney’s fees and
late charges and the case is remanded for further proceedings
to determine the proper amount of interest,
attorney’s fees and late charges.

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