The defendant, Wampus Milford Associates, LLC, appeals from the judgment of the trial court, rendered after a trial to the court, in this commercial lease action. The defendant claims that the court erred in (1) finding that, by the defendant's conduct, it impliedly waived notice requirements under the lease, (2) awarding damages to the plaintiff Milford Paintball, LLC,
The following facts, as found by the court in its post-trial memorandum of decision, are relevant to our resolution of the defendant's claims. "On February 10, 2004, the plaintiff and the defendant entered into a lease agreement (lease) for a portion of a building owned by the defendant at 80 Wampus Lane, Milford, Connecticut (premises). On February 13, 2004, Kathleen Rorick, a member of the plaintiff and on its behalf, provided the defendant with a security deposit in the amount of $32,083.52. The premises were to be used by the plaintiff as an indoor paintball field. The execution of the lease followed extensive negotiations between the parties regarding the terms of the lease. Under the lease, each party had certain obligations to be performed before the plaintiff could take occupancy. The plaintiff was to apply for and obtain zoning approval. In addition, § 3.06 of the lease provided that the defendant would undertake extensive renovations to the premises, referred to as `landlord's work.' Such work was to be completed within ninety days of the plaintiff's receipt of zoning approval. In the event that the landlord's work was not completed, the plaintiff was to provide the defendant with written notice of nonperformance and, upon receipt of such notice, the defendant was required to perform the work, or to commence performance and complete the landlord's work within a reasonable amount of time. On April 23, 2004, the plaintiff sent the defendant a letter notifying the defendant that it had received zoning approval. The defendant never commenced performance of the landlord's work. In the five months between May and October, 2004, the plaintiff and the defendant had conversations regarding performance of the landlord's work. The plaintiff did not send the defendant written notice of nonperformance. During these conversations the defendant indicated that commencement of the landlord's work would be forthcoming. According to the provisions provided for in the lease, the landlord's work should have been completed by July 23, 2004. In December, 2004, the plaintiff informed the defendant that it would not fulfill the terms of the lease because the defendant failed to perform the landlord's work. Despite requests, the defendant did not return the security deposit to the plaintiff. Thereafter, the defendant leased the space
On February 16, 2005, the plaintiff filed a four count complaint, alleging the defendant's breach of the lease, fraud, restitution and violation of CUTPA. On May 31, 2005, the defendant filed a counterclaim, alleging the plaintiff's breach of the lease. On July 28, 2005, the defendant filed an answer and special defenses, alleging that the plaintiff had failed to provide written notice of its default pursuant to the terms of the lease and that the plaintiff had anticipatorily breached the lease.
The matter proceeded to a trial before the court, and, on December 15, 2010, the court issued a posttrial memorandum of decision. The court found for the plaintiff on its breach of lease claim, determining that the defendant impliedly had waived its right to written notice prior to default, as provided by § 14.07 of the lease.
The court also found for the plaintiff on its CUTPA claim. Specifically, the court found that "[t]he defendant's conduct cannot be characterized as a mere breach of the lease agreement. Rather, the evidence demonstrates that the defendant engaged in wilful conduct that appears to have been calculated to mislead the plaintiff to believe the landlord's work would be
The court reserved decision on the issue of damages, ordering the parties to file supplemental briefs. On March 17, 2011, after the presentation of additional evidence and argument on the issue of damages, the court filed a second posttrial memorandum of decision. The court awarded the plaintiff compensatory damages in the amount of $34,987.52, plus prejudgment interest of $21,867.16, for a total compensatory award of $56,854.68. In addition, the court determined that the plaintiff was entitled to taxable costs and, pursuant to the terms of the lease and CUTPA, $73,217 in reasonable attorney's fees. This appeal followed.
On appeal, the defendant raises three claims that relate to the alleged breach of the lease agreement. Specifically, the defendant claims that the court improperly (1) found that the defendant was equitably estopped from asserting its entitlement to written notice of default under the lease, (2) construed the terms of the lease when it found that the defendant's failure to complete landlord's work was a breach of the lease entitling the plaintiff to damages and (3) found for the plaintiff on the defendant's counterclaim. In addition, the defendant claims that the court improperly found that it had violated CUTPA and improperly awarded the plaintiff attorney's fees pursuant thereto.
The defendant first claims that the court erroneously found that the defendant was equitably estopped, on the basis of telephone conversations its representatives had with Rorick, from asserting its entitlement to written notice of default under the lease. The defendant argues that "there is no credible testimony that statements were made on behalf of the defendant from which one could conclude that it waived the requirement in [§] 14.07 of the [l]ease that the plaintiff give written notice of non-performance of [l]andlord's obligations...."
The court found that the defendant, by its conduct, "impliedly waived its contractual right to written notice of nonperformance...."
Thus, we begin by setting forth the standard of review applicable to claims of equitable estoppel. "The party claiming estoppel ... has the burden of proof.... Whether that burden has been
"Strong public policies have long formed the basis of the doctrine of equitable estoppel. The office of an equitable estoppel is to show what equity and good conscience require, under the particular circumstances of the case, irrespective of what might otherwise be the legal rights of the parties.... No one is ever estopped from asserting what would otherwise be his right, unless to allow its assertion would enable him to do a wrong....
"There are two essential elements to an estoppel: the party [against whom it is asserted] must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other. In the absence of prejudice, estoppel does not exist." (Citation omitted; internal quotation marks omitted.) Fischer v. Zollino, 303 Conn. 661, 667-68, 35 A.3d 270 (2012).
In determining that the defendant was estopped from asserting its entitlement to written notice of default under § 14.07 of the lease, the court expressly relied on conversations between the defendant and Rorick. Specifically, the court found that waiver could be implied from the defendant's telephone conversations with Rorick. Based on our review of the record, however, we do not agree with the trial court's legal conclusion that Rorick's conversations with representatives of the defendant provided a sufficient evidentiary basis to support the application of equitable estoppel as a bar to the defendant's special defense asserting an entitlement to written notice of default under the terms of the lease, and we determine that the court's finding was clearly erroneous.
The record supports the court's conclusion that Rorick and representatives of the defendant engaged in telephone conversations prior to the expiration of the ninety day period wherein the defendant indicated that performance of landlord's work was forthcoming. The defendant's statements, however, made prior to the expiration of the ninety day period merely reiterated the defendant's obligations pursuant to the lease. Moreover, our review of the record does not support the court's finding that the defendant indicated to Rorick subsequent to the expiration of the ninety day period that it would timely perform the landlord's work, and we determine that such finding is clearly erroneous.
Even if we were to assume that the evidence presented was sufficient to infer that the defendant made affirmative representations to Rorick regarding performance after the expiration of the ninety day period, we, nonetheless, would conclude that application of equitable estoppel would be unwarranted in light of the plaintiff's admission that it intentionally decided not to provide the defendant with the written notice required pursuant to § 14.07 of the lease. "For estoppel to exist, there must be misleading conduct resulting in prejudice to the other party." Palumbo v. Papadopoulos, 36 Conn.App. 799, 802, 653 A.2d 834 (1995). In this case, for estoppel to apply, the plaintiff would have to demonstrate that the defendant's actions were misleading, causing the plaintiff to believe that it did not have to adhere to the notice provision of the lease. The record, however, does not support a finding that the defendant's representations misled the plaintiff into believing that it was not required to provide written notice. Our review of the record has uncovered no statement that would allow us to infer that the defendant impliedly had waived the written notice provision of the lease and the plaintiff cites to no portion of the record supporting such inference.
Estoppel is an equitable doctrine and, as such, a court should consider the conduct of all interested parties. See Novella v. Hartford Accident & Indemnity Co., 163 Conn. 552, 566, 316 A.2d 394 (1972) ("[a] party, to be entitled to the benefit of [estoppel] is himself bound to the exercise of good faith" [internal quotation marks omitted]). The record provides evidence that the plaintiff not only was aware that the defendant had failed to perform landlord's work, but that the plaintiff made a conscious business decision not to provide written notice of default to the defendant, despite knowing that the lease required it. Specifically, the following examination by the defendant's counsel of Rorick took place before the court:
"Q. Why is it that you did not send a, a notice of default under paragraph 14.07 of the lease after July 23, 2004?
"A. If we, we, let's see, we discussed this. And first of all, I did not believe that the lease had really commenced because the landlord's work was never completed. So it was my view that the lease never commenced. Over and above the fact that if we sent a notice of default and they cured it, and we opened at a time, much later time beyond September, the business would have failed.
"From a practical perspective, if we sent your client a notice of default and he cured it, and he took his time like he was aware of with [another tenant], what was dragging out over there for months and months and months and we weren't getting anywhere for months and months and months. And then we sent them a notice of default. And then they didn't, and then they cured it, and we opened long after September, we would have had a problem. The business would definitely have failed."
On the basis of the foregoing, we determine that the court erred in finding
Although the defendant raises other claims of error, we decline to reach those issues. Where a substantive error permeates the court's findings and underlies its judgment, reversal of the judgment and further proceedings may be required. See, e.g., Milford Paintball, LLC v. Wampus Milford Associates, LLC, 117 Conn.App. 86, 92, 978 A.2d 118 (2009) (remanding for new trial and declining to reach further claims on appeal where court's findings and judgment were based on substantive error). Our review of the court's December 15, 2010 memorandum of decision convinces us that its resolution of the present matter was predicated on its erroneous finding that the defendant was estopped from asserting its special defenses. For example, it is apparent that the court did not consider the merits of the defendant's counterclaim, having determined that it "must fail" as a consequence of its finding regarding estoppel. Furthermore, it is apparent that the court did not consider the merits of the plaintiff's fraud and restitution claims, having determined that they were "pleaded as alternative theories of recovery" to the plaintiff's breach of contract claim.
The judgment is reversed and the case is remanded to the trial court with direction to render judgment in favor of the defendant on the second count of the plaintiff's complaint sounding in breach of contract, and for a new trial on the defendant's counterclaim and on the first, third and fourth counts of the plaintiff's complaint.
In this opinion the other judges concurred.
"Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Internal quotation marks omitted.) Ahmadi v. Ahmadi, 294 Conn. 384, 390, 985 A.2d 319 (2009). Nonwaiver clauses in commercial agreements are enforceable, barring the application of waiver and estoppel defenses unless a party establishes the existence of unequal bargaining positions or "sharp dealing." See Christensen v. Cutaia, supra, 211 Conn. at 619-20, 560 A.2d 456; S.H.V.C., Inc. v. Roy, supra, 188 Conn. at 507, 450 A.2d 351; see also Webster Bank v. Oakley, 265 Conn. 539, 549-51, 830 A.2d 139 (2003), cert. denied, 541 U.S. 903, 124 S.Ct. 1603, 158 L.Ed.2d 244 (2004). The court's memorandum of decision does not address the lease's nonwaiver clause, and the court made no finding of unequal bargaining positions or sharp dealing or that the defendant relinquished its right to enforce the nonwaiver clause by waiving it in a signed writing. Therefore, under the facts presented in the record, we cannot determine that implied waiver or equitable estoppel would provide the plaintiff a means to avoid the nonwaiver provision of the lease.
