Noroton Heights Shopping Ctr., Inc. v. Phil's Grill, LLC

207 Conn.App. 211

262 A.3d 970

NOROTON HEIGHTS SHOPPING CENTER, INC.

v.PHIL'S GRILL, LLC

AC 44042

Appellate Court of Connecticut.

Argued May 10, 2021

Officially released September 7, 2021

Scott C. DeLaura, for the appellant (defendant).

Abram Heisler, for the appellee (plaintiff).

Prescott, Moll and Lavery, Js.

LAVERY, J.

In this summary process action, the defendant tenant, Phil's Grill, LLC, appeals from the trial court's judgment of possession rendered in favor of the plaintiff landlord, Noroton Heights Shopping Center, Inc. On appeal, the defendant claims that the trial court was incorrect in finding that the defendant violated the relocation clause of a commercial lease executed by the parties. We agree with the defendant and, accordingly, reverse the court's judgment of immediate possession in favor of the plaintiff.

The following facts and procedural history are relevant to this appeal. The plaintiff is the owner of Noroton Heights Shopping Center (shopping center) in Darien.

On November 12, 2010, the plaintiff entered into a commercial lease with the defendant for retail space (demised premises) located within the shopping center. The lease was for an initial term of five years, commencing on October 1, 2010, and continuing through September 30, 2015, and contained three renewal options. At the time the lease was entered into, the plaintiff was contemplating the redevelopment of the shopping center. As a result, the lease contained a relocation clause. Subsection A of the relocation clause provides in relevant part that "[t]he Landlord may, at its option, before or after the Commencement Date, and during any option renewal period pursuant to Section 40 hereof, elect by notice to the Tenant to require the Tenant to vacate and surrender the Demised Premises, and to substitute for the Demised Premises other reasonably similar space elsewhere in the Shopping Center (the ‘Substitute Premises’) designated by the Landlord (provided that the Substitute Premises contains at least the same square foot area as the Demised Premises) and to move the Tenant to the Substitute Space. Landlord's notice shall be accompanied by a plan of the Substitute Premises, which such notice shall set forth the square foot area of the Substitute Premises. The Tenant shall vacate and surrender the Demised Premises and shall occupy the Substitute Premises promptly (and in any event not later than fifteen [15] days after the Landlord has substantially completed any work to be performed in the Substitute Premises pursuant to [subsection] B hereof).... Should the Tenant refuse to relocate to the Substitute Space, the Landlord may, at its option, by notice to the Tenant, elect to terminate this Lease, which such termination shall be effective thirty (30) days after the date of such termination notice."

Subsection B of the relocation clause further provides in relevant part that "the Landlord shall, at the Landlord's expense, do the following, (i) furnish and install in the Substitute Premises fixtures, improvements and appurtenances at least equal in kind and quality to those contained in the Demised Premises at the time such notice of substitution is given by the Landlord .... The Tenant agrees to cooperate with the Landlord so as to facilitate the completion by the Landlord of its obligations under this Section and the prompt surrender of the Demised Premises, and further agrees to promptly perform in the Substitute Premises any work to be performed therein by the Tenant to prepare the Substitute Premises for the Tenant's occupancy."

Thereafter, the defendant opened a restaurant at the demised premises. On February 29, 2016, the parties renewed the lease and extended it through September 30, 2020. The first amendment to indenture of lease further referenced the possible redevelopment of the shopping center. Section 6 of the amendment, titled "Shopping Center Redevelopment," provides in relevant part that "Tenant acknowledges that Landlord intends to redevelop the Noroton Heights Shopping Center (the ‘Shopping Center’), in which the Rental Premises (as defined in the Lease) are located. Without limiting Landlord's relocation right set forth in Section 39 of the Lease or Landlord's rights or ability to perform such redevelopment in general, Landlord agrees to reasonably cooperate with Tenant in good faith to the extent reasonably practical during any redevelopment of the Shopping Center to minimize any material and adverse impact of such redevelopment on the conduct of Tenant's business at the Rental Premises during the hours when the restaurant operated by Tenant is customarily open in the ordinary course of business .... In the event Tenant's business is materially and adversely impacted by Landlord's redevelopment activities at the Shopping Center, the parties agree to mutually explore alternative avenues of reducing such material and adverse impact to the extent feasible, and, if not feasible or commercially prudent under the then-prevailing circumstances, Tenant shall have the right, as its sole and exclusive remedy, to terminate the Lease upon ten (10) business days’ prior written notice to Landlord. Tenant shall not be entitled under such circumstances, and hereby waives, all claims against Landlord for any compensation or loss of use of the Rental Premises occasioned by such redevelopment activities." (Emphasis omitted.) Apart from Section 6, the amendment to the lease did not further address the relocation clause and provided that the lease, "as amended by this Amendment, will continue in full force and effect in accordance with its terms."

In 2017, the plaintiff obtained approval from the Planning and Zoning Commission of the Town of Darien (zoning commission) for the phased redevelopment of the shopping center. Pursuant to the phased plan, the plaintiff would redevelop the shopping center by razing a building, building a new building in its place, moving an existing tenant into the new building, and then razing the building that the tenant previously had occupied. In December, 2017, after the phased plan was approved, representatives for the plaintiff met with representatives for the defendant to discuss potential substitute premises. During the meeting, the defendant expressed interest in one of the proposed substitute premises and indicated to the plaintiff that it would be willing to move into that spot.

On April 4, 2018, the plaintiff sent a letter to James Calcagnini, the sole member of the defendant, regarding the proposed substitute premises (notice of substitution). The letter served "as formal notice to you of Landlord's election to require you to vacate and surrender your current leased space and the substitution of other reasonably similar space in the redeveloped Shopping Center as your new leased premises." Attached to the notice of substitution were two plans showing the location of the proposed substitute premises. The letter further requested that Calcagnini confirm in writing no later than April 19, 2018, that the proposed substitute premises was acceptable and that the plaintiff would assume that the defendant was unwilling to relocate to this space if no response was received by that date. The notice of substitution was sent to Calcagnini's principal place of residence via United Parcel Service (UPS) over-night delivery. Calcagnini, however, never received the notice of substitution.

On July 2, 2019, James Palmer, a principal of the plaintiff, met with Calcagnini. During the meeting, Palmer gave Calcagnini a bullet point list of topics to discuss. One of the bullet points stated that Calcagnini "waived his relocation rights by not responding to April 4, 2018 letter sent by [Palmer] via UPS showing proposed substitute space." This meeting was the first time that Calcagnini became aware of the notice of substitution. The July 2, 2019 meeting ended unsuccessfully, and Calcagnini mentioned getting an attorney involved after seeing the contents of the bullet points.

On July 31, 2019, the zoning commission approved an amended plan for the redevelopment of the shopping center. Under the new plan, the redevelopment would be conducted in a single phase rather than in multiple phases. That same day, Palmer hand delivered a termination of lease letter to the defendant at the demised premises. The termination of lease referenced the notice of substitution, stated that the defendant had failed to accept the proposed substitute premises identified in that notice, and stated that, as a result, the plaintiff was electing to terminate the lease pursuant to the relocation clause.

On August 30, 2019, the plaintiff served the defendant with a notice to quit. The plaintiff's notice to quit stated that it was electing to terminate the defendant's lease "for failure to accept a substitute premises which was offered to you on April 4, 2018." On September 23, 2019, the plaintiff filed a three count summary process complaint alleging (1) termination of lease by express stipulation, (2) lapse of time, and (3) occupancy by one who originally had a right or privilege but such right or privilege has terminated. In response to the plaintiff's summary process complaint, the defendant asserted three special defenses: failure to perform a condition precedent, impossibility or impracticability, and unclean hands.¹ Trial was held over the course of two days on January 23 and February 14, 2020.

The court rendered judgment in favor of the plaintiff. In its memorandum of decision, the court found that, although the defendant had the right to possess the demised premises through September 30, 2020, the parties knew at the time of the execution of the lease and its amendment that the plaintiff was planning to redevelop the entire shopping center and that they contracted for this eventuality. The court also found that the "plaintiff continually attempted to involve the defendant in its relocation plans and at all times wished to provide the defendant...