Opinion
No. CV 01-0182683 S
December 7, 2005
MEMORANDUM OF DECISION ON DEFENDANTS' OBJECTIONS TO FINDINGS OF FACT
Procedural and Factual Background
The plaintiff, Glenwood Management Corporation, has commenced this breach of contract action for unpaid rent and other damages under a written lease of an apartment in the "Barclay" building on York Avenue in New York City. The defendants are the former tenants of the apartment, James Bicks and Jill Bicks, now residing in Westport. The initial lease was for the period November 29, 1996 through November 28, 1997. The annual lease renewal agreement at issue was for a term of one year, commencing November 29, 1998 and terminating November 28, 1999 at a monthly rent of $3,640. At the time of entering into the 1998-1999 lease renewal the defendants had signed a contract to purchase a house in Connecticut expected to close in March of 1999. The defendants had asked for a renewal term expiring in March 1999, but the plaintiff insisted on a full one-year term renewal subject to a separate written "lease cancellation agreement" which gave the defendants the right to terminate the lease and the obligation to vacate the apartment on the "vacatur date" of March 31, but, if they failed to vacate or failed to pay all rent due by that date, the lease cancellation agreement would be "null and void." By March of 1999 the defendant's contract for the house in Connecticut had fallen through for some reason and they had contracted to purchase another house in Connecticut then under construction and expected to close in May of 1999. This was communicated to the plaintiff in March 1999 and a second lease cancellation agreement was entered into with a vacatur date of May 31, 1999. The discussions leading to the signing of the original lease in 1996, each annual lease renewal agreement thereafter, and the two lease cancellation agreements were between the defendant Jill Bicks and plaintiff's Assistant Vice President Ron Susser, the head of plaintiff's leasing department, who signed each of those agreements on behalf of the plaintiff. In connection with the two lease cancellation agreements Mr. Susser allowed Mrs. Bicks to select the vacatur date to be inserted in the form agreement. The defendant Jill Bicks thereafter made arrangements with the plaintiff's on-site building manager at the Barclay, Jean Becker, to move out and to have use of the freight elevator on May 30 or May 31, 1999 As that moving date grew close, the defendants became aware of certain problems in having their Connecticut house ready for occupancy by the end of May. Several days before the scheduled moving date Mrs. Bicks explained the situation to Jean Becker who said there was no new tenant scheduled to move into the apartment and verbally agreed to extend the moving date by about a week. That same process was repeated twice more in approximate weekly increments until the moving date was set as June 19, 1999. The defendants did vacate the apartment on June 19. At no time was there any written agreement extending the lease cancellation date beyond May 31, 1999. At no time did the defendants make any contact with plaintiff's Assistant Vice President Ron Susser regarding their desire to stay in the apartment after May 31, 1999. The defendants paid all rent due through April 30, 1999. They did not pay the rent due for the month of May 1999. They made the unilateral decision that the May rent would be covered by their security deposit. They did pay the pro-rated rent for the period June 1 through June 19, 1999 by their check dated June 18, 1999 in the amount of $2,273.75 which was accepted and negotiated by the plaintiff. By a letter dated June 18, 1999 and handed to the defendants on June 19, the plaintiff takes the position that the lease expiration date was November 28, 1999 and that it would hold the defendants responsible for all rent accruing until the apartment could be re-rented. The plaintiff re-rented the apartment as of September 1, 1999. The plaintiff landlord is claiming in this lawsuit that defendants breached the lease and the second lease cancellation agreement by failing to vacate by May 31, 1999, and asks for back rent for the month of May 1999, the period June 19 through June 30, 1999, and the months of July and August 1999, plus reasonable attorneys fees. The defendants, both Connecticut attorneys who have represented themselves throughout these proceedings either pro-se or at various times as counsel appearing for each other, deny that that they breached the lease or the lease cancellation agreement, which they claim by special defense had been verbally modified and extended to June 19, 1999, the day they vacated. They have also filed special defenses claiming that: any breach of the lease or the lease cancellation agreement was induced by the intentional conduct of the plaintiff; waiver of the May 31, 1990 vacatur date, promissory estoppel, harassment and unclean hands, accord and satisfaction, and failure to mitigate damages. They are also counterclaiming against the plaintiff for alleged breach of the implied covenant of good faith and fair dealing.
After the pleadings were closed and the time for filing a jury claim had expired, the case was assigned for fact-finding pursuant to Conn. Gen. Stat. § 52-549 and Practice Book § 23-53. The case was assigned to Richard C. Stewart, Esq., who heard the case on September 17, 2004. A transcript of the hearing has now been filed. The Fact Finder issued his Finding of Facts dated December 13, 2004 which concluded by recommending that judgment enter in favor of the plaintiff on the complaint in the amount of $10,069.25 (which included an award of $1,313 for attorneys fees) and on the counterclaim. Defendants, acting by Atty. James Bicks as counsel, on January 19, 2005 filed Defendants' Objections to Findings of Fact and Request for a Hearing. The defendants object to some eight of the 51 enumerated findings made by the Fact Finder, claiming that the eight findings are clearly erroneous, and ask the Court to make numerous new findings not made by the Fact Finder which allegedly are based on admitted or undisputed evidence at the hearing. Based on the requested deletion of the allegedly clearly erroneous findings and the requested new findings claimed to be based on admitted or undisputed evidence, the defendants argue that the resulting record requires rejection of the judgment for the plaintiff as recommended by the Fact Finder on no less than seven independent legal grounds under the law of New York. Those grounds can be summarized as follows: (1) plaintiff did not meet its burden of proving any actual damages from the defendant's failure to vacate by May 31, and application of the "null and void" provision of the lease termination agreement is therefore an illegal penalty; (2) the vacatur date in the lease cancellation agreement can be and was orally modified under New York Law even if the lease provides that all modifications must be in writing; (3) there is insufficient evidence under New York Law to support the finding that Jean Becker lacked actual authority to bind the plaintiff to an extension of the vacatur date; (4) the undisputed evidence shows that Ms. Becker had apparent authority to grant a brief extension to the vacatur date; (5) the undisputed evidence establishes each of the defendants' special defenses of estoppel, waiver, and accord and satisfaction; (6) plaintiff did not make diligent efforts to re-let the apartment; and (7) the award of $1,313 in attorneys fees to the plaintiff was premature and based on insufficient evidence.
See this Court's Memorandum of Decision on Plaintiff's Procedural Objections to Defendants' Objections to Findings of Fact dated July 8, 2005. Pursuant to an order contained therein the defendants filed a certified copy of the hearing transcript on August 16, 2005.
As to the claim for a "hearing" no one appeared for the defendants when these objections were docketed on the arguable matters short calendar on March 28, 2005. The plaintiff did appear by counsel who argued only the procedural points that have been disposed of by the Memorandum of Decision dated July 8, 2005 referenced in Footnote 1. The Court will decide the merits of the defendants' objections to the Fact Finder's report strictly on the basis of the Courts' review of the court file, the Findings of Fact, the hearing transcript and exhibits, and the memoranda of law submitted by both parties.
The parties agreed at the hearing that New York substantive law applies to this dispute and the Fact Finder so found. There has been no objection to that finding. The Court is in accord with the application of New York substantive law as the forum having the "most significant relationship" to the issues involved since the dispute arose when both parties were living or doing business in New York, the lease and all subsequent agreements were made in New York, and the apartment at issue is located in New York. See Reichold Chemicals, Inc. v. Hartford Accident and Indemnity Company et al., 243 Conn. 401 (1997).
Standard of Review
"A reviewing authority may not substitute its findings for those of the trier of the facts. This principle applies no matter whether the reviewing authority is the Supreme Court . . . the Appellate Court . . . or the Superior Court reviewing the findings of attorney trial referees. This court has articulated that attorney trial referees and fact finders share the same function . . . whose determination of the facts is reviewable in accordance with well established procedures prior to the rendition of judgment by the court . . . The factual findings of a [trial referee] on any issue are reversible only if they are clearly erroneous . . . [A reviewing court] cannot retry the facts or pass upon the credibility of 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."(Citations omitted; internal quotation marks omitted.) Elgar v. Elgar, 238 Conn. 839, 848-49 (1996). The court's role in reviewing the findings of an attorney trial referee (or a fact finder) has been described as a three-step process: ". . . first, the trial court must review the . . . entire report to determine whether the recommendations contained in it are supported by findings of fact in the report . . . Second, the court must insure that the report does not contain legal conclusions for which there are no subordinate facts . . . [and] Third, the report must be reviewed to determine if it is legally and logically correct." (Citations omitted; internal quotation marks omitted.) Killion v. Davis, 257 Conn. 98, 102-03 (2001). On questions of law, therefore, the review is plenary. Meadows v. Higgins, 249 Conn. 155, 162 (1999). Although it is said that in making findings of fact ". . . attorney trial referees and fact finders share the same function . . ." Elgar, supra, and are therefore subject to the same "clearly erroneous" standard of review with regard to those findings of fact, the Practice Book rules draw a distinction between attorney trial referees and fact finders when it comes to the power of the reviewing judicial authority to make findings of fact from the evidence in lieu of or in addition to those made by the attorney trial referee or the fact finder. With respect to attorney trial referees, Practice Book § 19-17(b) provides: "The court may correct a report at any time before judgment upon the written stipulation of the parties, or it may upon its own motion add a fact which is admitted or undisputed or strike out a fact improperly found." (Emphasis added.) See, e.g. Hall-Brooke Foundation, Inc. v. City of Norwalk, 58 Conn.App. 340 (2000) (rejection of fact finder report based on additional judicial findings from undisputed testimony by the mayor of Norwalk as to the absence of line item authorization in the city budget for detoxification service payments to the plaintiff). On the other hand, with respect to the reports of fact finders, Practice Book § 23-58(b) provides: "The judicial authority may correct a finding of facts at any time before accepting it, upon the written stipulation of the parties." (Emphasis added.) It has been held under § 23-58(b) that it was reversible error for a reviewing judicial authority, in the absence of a stipulation, to have substituted its own factual determinations from its reading of the transcript for the findings made by the fact finder. Wilcox Trucking, Inc. v. Mansour Builders, Inc., 20 Conn.App. 420 (1989), where the Appellate Court said: "It is apparent that here the trial court corrected the findings of fact to make them consistent with its reading of the record, and then proceeded to render a judgment in line with that amended finding. This was error. Once the court rejected the findings of fact, its options were severely limited. It either had to remand the matter to the same or a different fact finder for a rehearing or, in the alternative, it had to completely revoke the reference. Practice Book § 546J." Wilcox Trucking, supra, at 424. This Court will be governed accordingly with respect to the many requests for additional findings advanced by the Bicks defendants.
Practice Book § 23-58(a) (formerly § 546(J) provides: "After review of the finding of facts and hearing on any objections thereto, the judicial authority may take the following action: (1) render judgment in accordance with the finding of facts; (2) reject the finding of facts and remand the case to the fact finder who originally heard the matter for a rehearing on all or part of the finding of facts; (3) reject the finding of facts and remand the matter to another fact finder for rehearing (4) reject the finding of facts and revoke the reference; (5) remand the case to the fact finder who originally heard the matter for a finding on an issue raised in an objection which was not addressed in the original finding of facts; or (6) take any other action the judicial authority may deem appropriate." In Wilcox Trucking, Inc. v. Mansour Builders, Inc. (Cited in accompanying text) the Appellate Court rejected the argument that a reviewing court could make its own findings based on undisputed evidence under the general "any other action" authorization in subsection (6), the court holding that the general language of subsection (6) would be limited by the specific prohibition of what is now § 23-58(b), (quoted in the text at page 7).
Discussion
The Court will quote and then address separately each of the defendant's seven claims of error, with appropriate references to the Findings of fact and the record.
" Glenwood Did Not Meet Its Burden To Prove That It Was Damaged by the Bicks' Alleged Breach."
The Fact finder made several findings that would relate to this claim:
"Susser stated the plaintiff would require that the defendants again enter into another one year [ending 11/28/99] lease in the standard form if they intended to stay in occupancy, but that the plaintiff had another form called a `Lease Cancellation Agreement,' which the plaintiff and the defendants would enter into simultaneously." Finding of Fact ("FOF") 15.
"The LCA form used by the plaintiff . . . is a one-page form comprised of four paragraphs. The LCA provides for a cancellation date upon which the lease is cancelled and the tenant is to vacate the apartment. Paragraph 4 of the LCA states that it is nullified if a tenant fails to pay all monies owed at the time of vacatur, or if a tenant holds over beyond the agreed cancellation/vacatur date." FOF 16.
"The new cancellation date of May 31, 1999 on LCA-2 was selected by Defendant Jill Bicks because the scheduled completion date on the Connecticut house was May 15, 1999." FOF 21.
"Neither the lease nor either LCA was ever orally modified by the agreement of the parties." FOF 26.
"The defendants did not vacate by May 31, 1999, a condition of lease cancellation under the LCA-2." FOF 27.
"The defendants did not pay for May rent, a condition of lease cancellation under the LCA-2." FOF 28.
"The defendants moved out on June 19, 1999 and returned the keys." FOF 34.
"The defendants owed $3640 per month for the months of May, June, July and August, for an aggregate total of $14,560." FOF 39 [After application of credits for the security deposit and the partial payment made for June 1-19, the net amount of rental found to be due was $8,756.25. FOF 40].
None of the foregoing findings have been specifically objected to by the defendants but they argue, based on these findings taken in conjunction with other findings the defendants ask the court to make, and focusing strictly on the second Lease Cancellation Agreement as if it were a free-standing agreement separate and apart from the Lease itself and the events as they actually occurred in May and June of 1999, that the $8,756 in rent under the lease awarded by the fact finder does not represent or reflect any actual damages incurred by the plaintiff because the defendants held over for 19 days after the May 31 vacatur date. They argue that the plaintiff would have received no rental at all after May 31 if the defendants had moved out on that date, and in fact received 19 days rent for the period June 1 through June 19 and therefore were better off — not damaged — because of the holdover. Characterizing the "null and void" clause of the LCA (which reverted the parties to the one-year lease renewal ending November 28, 1999) as a liquidated damages clause in a contract, they cite cases such as LeRoy v. Sayers, 217 A.D.2d 63, 635 NYS 2d 217 (1st Dept. 1995) for the proposition that stipulated damages that far exceed actual damages are in effect an illegal penalty and not enforceable.
As previously discussed, the Court, in the absence of a stipulation between the parties, cannot make additional findings beyond those made by the fact finder. Practice Book § 23-58.
The flaw in this argument is twofold. First, it focuses exclusively on the Lease Cancellation Agreement as if it were a contract separate and distinct from the lease. The complaint in this case alleges breaches of both the Lease and the Lease Cancellation Agreement. Under the plain language of the LCA (assuming that the vacatur date was not extended, as the fact finder found) the relationship of the parties went back exclusively to that of landlord and tenant under the Lease expiring on November 28, 1999 when the defendants failed to vacate on May 31, not having paid the May rent. And under that lease the plaintiff sustained loss of rental income for the month of May (FOF 28) and began to sustain additional loss of rental as of June 20, 1999 and thereafter. (FOF 39, 40.) The second flaw in the argument is that it is made from hindsight, with full knowledge of what actually happened on and after the May 31, 1999 vacatur date. But, in determining the enforceability of a liquidated damages clause, ". . . courts should consider the surrounding circumstances and the apprehension of damages that existed in the minds of the parties at the time that the contract was made." (Emphasis added) (Internal quotation marks omitted.) LeRoy v. Sayer, supra, 217 A.D.2d at 69 (citing 36 NY Jur. 2d, Damages § 156, at 267). At the time the second Lease Cancellation Agreement was made in March of 1999, the parties could not have known how long, if at all, the defendants would hold over beyond the vacatur date or whether or not they would make any payments of rent thereafter. Conceivably the defendants could have held over for months without making any rental payments at all. It was reasonable and appropriate therefore for the parties to agree in advance to put the Lease back into effect after the vacatur date, so that the parties would clearly be subject to all the rights and responsibilities they had for the previous four years, and all the protections for the rights of each party afforded by New York laws applicable to landlord and tenant. The Court therefore does not find that there was an illegal penalty occasioned by the findings of the fact finder in awarding rent to the plaintiff. The Court further finds that none of the findings enumerated above were clearly erroneous, there being evidence in the record to support each finding.
"The LCA was Orally Modified. Thus the Bicks Did Not Breach It by Remaining in the Apartment After May 31."
The defendants allege in their first special defense that the second Lease Modification Agreement was modified on three occasions to extend the vacatur date ultimately to June 19, 1999. Under Connecticut procedural law, the defendants thereby assumed the burden of proof on the modification claim. Zhang v. Omnipoint Communications Enterprises, Inc., 272 Conn. 62, 646 (2005). The fact finder found:
"Neither the Lease nor either LCA was ever orally modified by agreement of the parties." FOF 26.
The issue of whether or not there in fact was an oral modification of the LCA is inextricably tied to the issue of whether or not Jean Becker had actual or apparent authority to agree to a modification of the LCA. Because the Court, for reasons to be discussed later in this memorandum, does not reject as clearly erroneous the fact finder's findings that Jean Becker lacked actual or apparent authority to enter into lease agreements with tenants, or to change or modify lease terms, or to execute lease cancellation agreements on behalf of plaintiff, the finding that the LCA was orally modified is likewise not clearly erroneous.
1. "Under New York Law, the Vacatur Date in the LCA Could be Orally Modified."
"Under paragraph 25 of the lease agreement between the parties, the parties agreed, `no act and agreement to surrender the Apartment from the Tenant shall be legal and enforceable unless signed in writing and no employee of landlord or landlord's agent has any authority to accept the keys before the end of the lease.'" FOF 35.
"The plaintiff and the defendant never entered into any written agreement extending the time to vacate under LCA-2." FOF 25.
The defendants argue contrary to FOF 35 that under New York Law an oral modification of a contract can be validly made even though the agreement has a "no oral modification" clause. Section 15-301 of the New York General Obligations law provides that any written agreement containing a clause proscribing oral modifications, ". . . cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement is sought." (Emphasis added.) New York courts have construed this to mean that an oral modification that is no longer executory, that is an oral modification that has been fully or partially performed, is an effective modification and a writing is not required. "Thus, § 15-301 nullifies only `executory' oral modifications. Once executed, the oral modification may be proved . . . Where there is partial performance of the oral modification sought to be enforced, the likelihood that false claims would go undetected is similarly diminished . . . But only if the partial performance be unequivocably referable to the oral modification is the requirement of a writing under § 15-301 avoided." Rose v. Spa Realty Assoc., 42 N.Y.2d 338, 343, 344 (1977). Here, assuming for the moment without deciding that there was an authorized oral modification extending the vacatur date of the second LCA from May 31 to June 19, the defendants performed, or at least partially performed, their obligations thereunder. They stayed in the apartment until June 19, and not longer, and returned the keys to the landlord. (FOF 34.) And they paid $2,273.75 in partial rent for the period June 1 through June 19. (FOF 40.) The Court finds, therefore, as a matter of law, that under the facts as found by the fact finder, a written modification was not required under New York law to extend the vacatur date of the second LCA to June 19. To the extent that the fact finder's conclusion of no modification is based on the lack of a writing, it is clearly erroneous, but that error is harmless in view of the Court's approval of the finding (FOF 26) that neither the Lease nor either LCA was ever orally modified.
2. "There is Insufficient Evidence to Support the Finding that Jean Becker Lacked Actual Authority to Bind Glenwood to the Lease Extension."
The contested finding of the fact finder is:
"Jean Becker had no actual or apparent authority to enter into lease agreements with tenants, or to change or modify lease terms, or to execute lease cancellation agreements on behalf of plaintiff." FOF 32.
This finding is supported by the testimony of plaintiff's witness, Lisa Guida: "Q. Did she [Jean Becker] have authority to enter into lease agreements with a tenant? A. No. Q. Did she have authority to change or modify any lease agreement? A. Absolutely Not. Q. Did she have authority to execute any lease cancellation agreement? A. No." (Tr. 62.) Defendants argue that this testimony, being "biased," "conclusory," and without foundation, is insufficient to support the FOF 32, citing M.P. Development v. Malone Economic Development Corp., 239 A.D.2d 839, 757 N.Y.S.2d 531 (3rd Dept. 1997). M.P. Development dealt with a claim that a lender's closing attorney and its executive vice-president Patrick Murtaugh, both present at a closing, had no authority to accept a promissory note signed by the borrower one day after the closing when it was discovered that no promissory note was presented to the borrower for signature at the closing. The court rejected the testimony of lender's president that the closing attorney and Murtaugh lacked such authority, saying "The assertion of lack of authority is based upon nothing more than the wholly conclusory averment to that effect by defendant's president, which we view as lacking in probative value . . . In addition, defendant's assertion of lack of authority is substantially undermined by the fact that Murtaugh himself issued the August 19, 1994 commitment letter . . ." (Citations omitted.) 239 A.D., 840, 841. This case is much different from M.P. Development. Although Ms. Guida testified as a record keeper, her testimony was not merely conclusive. She testified in detail as to the limits of Jean Becker's authority (Tr. 33, 62), which is reflected in Finding of Fact 30. Furthermore, unlike the situation in M.P. Development where Murtaugh had signed the loan commitment letter, the fact finder in this case found a course of dealing between the parties that ". . . all prior lease negotiations had occurred between Ron Susser and the defendants, and all leases and LCAs had been executed by the defendants and Ron Susser as agent for the plaintiff." FOF 31. Furthermore, when he sent the defendants their counterpart of the second lease cancellation agreement, he included in his cover letter of March 15, 1999 (Part of Def. Ex 3) the statement that, if the defendants were unable to comply with the lease cancellation date (May 31, 1999), they were to ". . . contact my office at least thirty (30) days prior to the vacatur date which you selected." The fact finder's conclusion that Jean Becker had no actual authority to extend the vacatur date of LCA2 therefore is supported by his specific findings which in turn are supported by evidence in the record which would pass the threshold test of M.P. Development. Finding of Fact 32 is not clearly erroneous.
"Jean Becker was an onsite manager for plaintiff whose job was to handle tenant complaints, schedule move-outs with the freight elevator, and fill out work order repairs to apartments." (FOF 30.)
3. "The Undisputed Evidence Shows That Ms. Becker Also Had Apparent Authority to Grant a Brief Extension of the Vacatur Date."
Defendants appear by this argument to be objecting to FOF 30 (quoted at Footnote 6), FOF 32, (quoted above in the discussion of actual authority) and FOF 31 which states "The defendants' claims that they thought Jean Becker had . . . apparent authority to bind plaintiff to an oral extension of the time to vacate is not credible because all prior lease negotiations had occurred between Ron Susser and the defendants, and all leases and LCAs had been executed by the defendants and Ron Susser as agent for the plaintiffs."
The foregoing findings relating to Jean Becker's lack of apparent authority are not clearly erroneous.
Under New York law apparent authority is created by "words and conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction." Hallock v. State, 64 N.Y.2d 224, 485 N.Y.S.2d 510, 513 1984). (Plaintiff's attorney had apparent authority to settle a case at a pretrial conference when the rules of court require that attorneys at pretrial conferences have authority to enter into binding settlements; and where plaintiff himself was present in court and heard the settlement agreement read into the record and did not object to the settlement until two months later.) The fact finder made no finding of any words or conduct of any agent or employee of the plaintiff Glenwood Management that would create the impression that Jean Becker had authority to extend the vacatur date of an LCA. The fact finder specifically even found that "Jean Becker never told either defendant that she (Jean Becker) had the authority to waive the requirement of the lease or LCA." (FOF 33.) The course of dealing between the parties whereby all lease negotiations were handled by Ron Susser, who signed the lease and all renewals, and the first and second Lease Cancellation Agreements were done through Ron Susser and signed by him (FOF 31) belies any notion that Jean Becker had apparent authority to extend or amend the vacatur date of a Lease cancellation Agreement that had been signed by Ron Susser. Although the defendants on this point attempt to distinguish between a "brief" extension of the vacatur date "by a few days" as opposed to a "lengthy" extension, that distinction finds no support whatsoever in the subordinate findings of the fact finder or in the record. Even if such a distinction were somehow relevant, there is nothing in the record to indicate that an extension of nineteen days would be considered "brief" rather than "lengthy."
The defendants repeatedly claim in their memorandum that leases and lease renewals were "Non-negotiable," yet Mrs. Hicks testified that on each occasion she was able to negotiate with Ron Susser the rental rate for the applicable term (Tr. 80, 127) which is a most significant provision of the agreement. This hardly seems to be a "non-negotiable" situation.
The first extension from March 31 to May 31 (60 days) was accomplished by the second LCA, signed by Ron Susser. The contested nineteen days of extensions is almost one-third as long.
The defendants further argue under the rule of Health-Loom Corp. v. Soho Plaza Corp., 272 A.D.2d 179, 709 N.Y.S.2d (1st Dept. 2000), that apparent authority must be found where an employer vests its employee with broad discretion to act on its behalf, knows that the employee has engaged in the disputed action, but remains silent and belatedly claims that the employee lacked authority for the action. In Health-Loom, the person claimed to have had apparent authority to sign a sublease was the "managing agent" of the landlord partnership and the spouse of the managing partner. She "routinely signed leases, verified pleadings, and made policy decisions regarding the lease . . ." 272 A.D. at 180 and had been given "complete authority [by the partnership] to act on their behalf." 272 A.D. at 182. The partnership attempted to reject her authority to sign the sublease after ". . . remaining utterly silent for a period of many years . . ." Id., even while the parties were in litigation over the sublease. The distinctions between the Health-Loom case and the present case are many and obvious.
The conclusion of lack of apparent authority of Jean Becker is supported by the subordinate facts found, which have a basis in the evidence, and are not legally incorrect.
The Undisputed Evidence Establishes Each of the Bicks' Special Defenses: Estoppel, Waiver, and Accord and Satisfaction.
As previously mentioned, as a matter of Connecticut procedural law the defendants have the burden of proof on their special defenses.
1. " Glenwood is Estopped from Enforcing the May 31 Vacatur Date."
New York's law of the doctrine of promissory estoppel is premised on a party's justified and detrimental reliance on the representations of the other party:
An estoppel rests upon the word or deed of one party upon which another rightfully relies and so relying changes his position to his injury. It is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought. (Internal quotation marks omitted.)
Nassau Trust Company v. Montrose Concrete Products Corp., 56 N.Y.2d 663, 667-68 (1982)
To establish a promissory estoppel, the person claiming estoppel must identify a clear and unambiguous promise from the person to be estopped, upon which the person claiming estoppel relied to his or her detriment.
57 New York Jurisprudence 2d, Estoppel § 50
The fact finder found:
"There was no credible evidence to support the Special Defense of Estoppel: the defendants failed to prove that Jean Becker explicitly told them that if they stayed beyond their agreed to vacatur date that she was authorized to, and was, modifying or extending orally the LCA date; nor was it reasonable reliance for the defendants, under the circumstances, to believe that they could stay beyond the written date to leave without any further obligation based on anything said or done by Jean Becker" (FOF 47).
FOF 47 negates the elements of a clear and unambiguous promise by Jean Becker, and reasonable or rightful reliance by the Bicks defendants on statements made by Jean Becker. FOF 47 is not clearly erroneous. There is evidence in the record as to the conversations between Jean Becker and Mrs. Bicks. (Tr. 95-97) (Tr. 138-39). It is not "unambiguously" clear from that testimony that Jean Becker was purporting to extend the vacatur date of the second Lease Cancellation Agreement, as opposed to simply agreeing to reschedule the logistics of the Bicks' moving date from the building, or, put another way is not unambiguously clear to the Court that Jean Becker was making a financial commitment on behalf of the plaintiff. The finding of no reasonable reliance is also supported in the record. The fact finder found a course of dealing between the parties whereby all prior lease negotiations had occurred between Ron Susser and the defendants, and all leases and LCAs had been executed by Ron Susser as agent for plaintiff. (FOF 31.) That course of dealing would be inconsistent with the claim that the defendants reasonably relied on what they claim to have been an oral extension of the LCA2 vacatur date by the building manager Jean Becker. The past history of dealings between the parties may be considered as to the reasonableness of claimed reliance on a representation. Nassau Trust Co. v. Montrose, supra, 56 NY2d at 186.
There is also New York authority for the proposition that an unauthorized promise cannot form the basis of a promissory estoppel against the promisor. Carson v. New York City Dept. of Sanitation, 707 N.Y.S.2d 93 (Appellate Div. 1st Dept., 2000) where the court said:
Also proper was the ensuing dismissal of petitioner's application pursuant to CPLR article 78. In this connection petitioner's claim of a promissory estoppel is without merit, for even if a DOS employee had promised petitioner reinstatement upon completion of a drug treatment program, the promise was unauthorized and DOS was not bound by it.
The fact finder having found that Jean Becker had no actual or apparent authority to enter into lease agreements with tenants, or to change or modify lease terms, or to execute lease cancellation agreements (FOF 32), and the Court having previously upheld those findings over defendant's objections, the lack of authority is established and would defeat the claim of promissory estoppel under the rule of the Carson case.
2. "Glenwood waived enforcement of the May 31 vacatur date." CT Page 15710
The defendants claim that Glenwood waived its right to insist on the May 31 vacatur date.The argument of waiver is that: (1) Mr. Susser told Mrs. Bicks and reiterated in his March 15, 1999 letter [part of def. Ex 3] that extensions of the May 31 vacatur could be granted; (2) Ms. Becker did in fact grant an extension of the date; and (3) Ms. Guida admitted that Mr. Susser would have too, if asked. From these facts the defendants claim waiver of the May 31 vacatur date "as a matter of law," citing Simon Son Upholstery, Inc. v. 601 West Associates, LLC, 268 A.D.2d 359, 702 N.Y.S.2d 256 (1st Dept., 2000) and Dice v. Inwood Hills Condominium, 237 A.D.2d 403, 655 N.Y.S.2d 562 (2nd Dept., 1997).
The Court has reviewed the March 15, 1999 letter from Ron Susser and finds no such statement therein. The letter does say: "if you will not comply with the cancellation date specified in the Lease Cancellation Agreement you must contact my office at least thirty (30) days prior to the vacatur date which you selected."
The fact finder found: "There was no credible evidence to support the Special defense of waiver. The defendants failed to prove that plaintiff, through Jean Becker or anyone else, by its conduct or failure to act, evinced any intent not to hold the defendants to their written agreement." FOF 48.
Under New York law, "Waiver is the voluntary abandonment or relinquishment of a known right, which, except for such waiver, the party would have enjoyed . . . The waiver may be accomplished by express agreement or by such conduct or failure to act as to evince an intent not to claim the purported advantage . . . and is generally as question of fact." (Citations and internal quotation marks omitted.) Dice v. Inwood Hills Condominium, supra, 237 A.D.2d at 404. (denial of summary judgment upheld against a claim that enforcement of a "no pet" rule of the condominium had been waived). The Court has already upheld findings that neither the lease not any LCA was ever orally modified (FOF 26) and that Jean Becker had no actual or apparent authority to do so (FOF 32), both of which are contrary to the second, and most important, premise of defendant's waiver argument, that Ms. Becker did in fact grant an extension of the May 31 date. There is nothing in the Dice or Simon Son Upholstery cases, supra, which support defendant's claim of waiver as a matter of law. As said in Dice, it is a factual issue. The fact finder found no credible evidence to support a waiver, and made findings negating essential elements, of a waiver. Those findings have support in the record and are not clearly erroneous.
3. "Glenwood's Negotiation of the Ricks' June Rent Check Without a Reservation of Rights Constituted an Accord and Satisfaction."
Defendant's Sixth Special defense claims an accord and satisfaction in that the plaintiff allegedly cashed defendants' rent checks including the rent check for June 1999, with no reservation of rights. This issue was briefed in Defendants' Post-Trial Memorandum of September 30, 2004, but the fact finder made no findings as to this special defense and did not otherwise address this special defense in his report of December 13, 2004 other than in his damage calculations (FOF 40) where he gave the defendants credit for partial June rent paid in the amount of $2,273.75. Under Practice Book § 23-58(a)(5) the case is remanded to the fact finder to make findings with regard to the claim of accord and satisfaction."Glenwood Did Not Make Diligent Efforts to Re-Let the Apartment."
This claim is alleged factually as defendant's Seventh Special Defense, so the defendants have assumed the burden of proof with respect to the issue of mitigation of damages. Zhang v. Omnipoint Communication Enterprises, Inc., supra
The fact finder found (FOF 46):
The plaintiff, even though it had no obligation to do so under New York law, made reasonable efforts to mitigate damages. It was reasonable to have obtained a new tenant by September 1, 1999 after the defendants waited until June 19, 1999 to vacate the premises and return the keys.
The fact finder's first point about New York law is legally correct. Under New York law, a landlord has no legal duty to mitigate damages after a tenant's abandonment of the premises during the term of a lease. Holy Properties, Ltd v. Kenneth Cole Productions, Inc., 87 N.Y.2d 130, 637 N.Y.S.2d 964 (1995):
The law imposes upon a party subjected to injury from breach of contract, the duty of making reasonable exertions to minimize the injury . . . Leases are not subject to this general rule, however, for, unlike executory contracts, leases have been historically recognized as a present transfer of an estate in real property. Once the lease is executed, the lessee's obligation to pay rent is fixed according to its terms, and a landlord is under no obligation or duty to a tenant to relet, or attempt to relet, abandoned premises in order to minimize the damages. (Citations omitted.)
Id. 87N.Y.2d at 133
While Holy Properties, Ltd. involved a commercial lease of an office building, the rule applies as well to residential leases. Whitehouse Estates, Inc. v. Post, 173 Misc.2d 558, 1997.
The only authority cited by defendants on this point is Palumbo v. Donalds, 194 Misc.2d 675, 754 N.Y.S.2d 856 (2003), a trial level decision of the Civil Court of the City of New York, County of Kings, Part 57 where Judge Battaglia said: "And, in this judicial district, a landlord has a duty to mitigate damages by reletting the premises when the tenant leaves before the end of the term. (See Paragon Industries, Inc. v. Williams, 122 Misc.2d 628, [App.Term 2d. Dept. 1983])" Id. 194 Misc.2d at 686. But Paragon, decided in 1983 would no longer be valid authority for the point, the Court of Appeals having ruled to the contrary in Holy Properties, Ltd., a 1995 decision. In determining the law of a foreign jurisdiction a Connecticut court must accept the ruling of the highest tribunal of the foreign jurisdiction. Cristilly v. Warner, 87 Conn. 461, 463 (1913).
Although the plaintiff had no legal obligation under New York common law to mitigate damages, there is in the lease a limited assumption of a duty not to fail to secure a new tenant "by deliberate inaction." The Standard Form of Apartment Lease between the parties (Plaintiff's Ex. A.) provides in ¶ 20(d): "The failure of the landlord to secure another tenant shall not release or change Tenant's liability for damages, unless due to deliberate inaction by Landlord." (Emphasis added.) Thus, although the fact-finder's finding of no duty to mitigate is legally correct under New York law, it is clearly erroneous as to the issue of a voluntary contractual assumption of a limited duty to mitigate — or not to deliberately fail to mitigate — which is expressly stated in the lease which is in evidence as a full exhibit in the case. There is a limited duty not to fail to relet the apartment due to "deliberate inaction." The fact-finder's second finding that the plaintiff's reletting of the apartment as of September 1, 1999 after the tenants had vacated on June 19 was "reasonable" is off the point. The issue is whether or not that delay, or any part thereof, was due to deliberate inaction by the plaintiff. The case is remanded to the fact finder to make appropriate findings as to mitigation of damages under that contractual standard.
New York recognizes the doctrine of a voluntary assumption of a duty not otherwise imposed by law. See, e.g. Giovanna Sporty, Inc. v. Honeywell, 274 A.D.2d 321, 710 N.Y.S.2d 321 (First Department, 2000). Although it has been held that the assumption of duty doctrine does not apply to a Landlord who, not otherwise obligated to do so, voluntarily attempts to mitigate damages, Sage Realty v. Kenbee Management-New York, 182 A.D.2d 480, 582 N.Y.S.2d 182 (First Department, 1992), this case is different in that there is an express provision in the lease containing a limited assumption of the duty.
"The Bicks, Not Glenwood, Are Entitled to Their Costs and Fees"
The defendants challenge the award of attorneys fees made by the fact finder in favor of the plaintiff. The fact-finder found:
FOF 42: The lease agreement between the parties provides for a recovery of attorneys fees of 15%.
FOF 43: 15% of the amount owed is $1,313 (rounded off).
FOF 44: The amount of $1,313, in light of the time put in by plaintiff's counsel, including almost a complete day of trial and submission of a brief, is reasonable.
FOF 50: The defendants cannot prevail on any claim, and are not entitled to attorneys fees.
The defendants argue that under New York law, the award of attorneys fees is "premature" because, the award must await the ultimate outcome of the controversy (presumably a reference to awaiting this Court's rulings on defendants' objections to findings of fact and any subsequent proceedings) in order to determine who has been the "prevailing party," and that, in any event an award of attorneys fees must be based on a finding, after hearing, of the reasonable value of legal services provided to the prevailing party by evidence of the time spent and service performed. New York law applies to substantive claims on this issue, including those concerning contract interpretation. Connecticut law applies to procedural issues, such as the appropriate standard of appellate review. Montoya v. Montoya, 91 Conn.App. 407, 415-16 (2005). The amount of attorneys fees awarded is subject to an abuse of discretion review. Id. at 430. Findings of fact are subject to a clearly erroneous review. Elgar v. Elgar, supra.
The Standard Form of Apartment Lease between the parties (Plaintiff's Ex. A.) provides:
In case of any reentry to the Apartment by Landlord, or ending of the Lease, as a result of dispossess proceedings or in any manner, (a) the rent shall become due and be paid up the time of the end of the lease term and Tenant shall be responsible for use and occupation until reentry or dispossess together with such expenses as Landlord may pay for legal expenses, attorneys fees, and costs and expenses of any dispossess proceedings. (¶ 20)
. . . if Landlord, in connection with any failure by tenant to obey the lease, spends or becomes obligated to spend any money including but not limited to attorneys fees in bringing any legal action or dispossess proceeding, such money so paid or debt incurred with interest and costs shall be considered to be additional rent to be paid by Tenant to Landlord within five (5) days of service or mailing of a bill or statement to Tenant. (¶ 22)
Based on the Court's careful review of Exhibit A, there is no provision in the Standard Form of Apartment Lease which provides for an award of attorneys fees equal to 15% of the amount awarded to the prevailing party. FOF 42, FOF 43, and FOF 44 are therefore clearly erroneous, and defendant's objections to those findings are sustained. FOF 50 is clearly now premature, since the case is being remanded to the fact finder for reconsideration of several issues. Under New York law when, as here, there is a lease provision entitling a prevailing landlord to an award of attorneys fees, a reciprocal covenant is implied, which entitles a prevailing tenant to recover attorneys fees. New York Real Property Law § 234; Centennial Restorations Company v. Wyatt, 248 A.D.2d 193, 669 N.Y.S.2d 585 (First Department, 1998). Although the award must await the "ultimate outcome" of the case to determine the prevailing party, the authorities cited by defendants do not support their apparent position that the award must await the outcome of the Superior Court's ruling on any objections to the findings of fact. The fact finder may make an appropriate award of attorneys fees at the conclusion of the fact-finding proceedings, subject to objection by any party under Practice Book § 23-57. The prevailing party is the party who obtains "the ultimate relief sought" or the party to whom the outcome is "substantially if not almost wholly favorable" Lynch v. Liebman, 177 A.D.2d 453, 576 N.Y.S.2d 550 (First Department, 1991). The amount awarded must be consistent with the reasonable value of legal services as established by evidence presented in an adversarial hearing. Kumble v. Windsor, 128 A.D.2d 425, 512 N.Y.S.2d 811 (First Department, 1987). Connecticut law is in accord. Smith v. Snyder, 267 Conn. 456, 479 (2004).
The case is remanded to the fact finder pursuant to Practice Book § 23-58(a)(5) to reconsider his award of attorney fees consistent with this ruling.
"Glenwood Breached its Implied Obligation of Good Faith and Fair Dealing."
This claim relates to defendants' counterclaim for breach of the implied covenant of good faith and fair dealing. The defendants claim therein that the implied covenant of good faith and fair dealing was violated by the plaintiff (a) by representing to defendants that they could vacate the apartment prior to November of 1999, without telling the defendants that, should they do so, it would seek to hold them to the entire term of the lease; (b) by representing to defendants that they could remain in the apartment until June 19, 1999 without telling them that should they do so, they would later take the position that defendants' remaining in the apartment beyond May 31, 1999 violated the Lease Cancellation Agreement; (c) by commencing this lawsuit despite the absence of any legal basis and despite the fact that the plaintiff was not damaged in any way by defendants' conduct; and (d) by engaging in harassing and unwarranted litigation tactics since this action was commenced.
The fact finder found that:
There was no credible evidence to support the defendant's claim that the plaintiff breached the covenants of good faith and fair dealing: The defendants failed to prove that plaintiff promised that further lease extensions would be granted orally, or in writing, so long as plaintiff had no other tenant to rent to the apartment. Plaintiff made it clear that all agreements had to be in writing; Plaintiff's enclosure letter enclosing LCA2 made that clear; Until the defendant actually moved out the plaintiff reasonably could not rent the premises, and defendants' last minute decision not to move out but to stay in beyond the agreed to written date of May 31, 1999 highlights this.
FOF 49.
Under New York law "all contracts imply a covenant of good faith and fair dealing in the course of performance." 511 West 232nd Owners' Corp. v. Jennifer Realty Company, 98 N.Y.2d 144, 746 N.Y.S. 2d, 131, 135 (2002). It has been said that "This covenant embraces a pledge that neither party shall do anything which will have the effect of destroying the right of the other party to receive the fruits of the contract."; but that ". . . the duties of good faith and fair dealing do not imply obligations inconsistent with other terms of the contractual relationship." (Citation omitted; internal quotation marks omitted.) Id., 98 N.Y.2d at 153.
FOF 49 is not clearly erroneous. It is rightfully premised on other findings of fact already accepted by this Court, having to do with the signing and import of the Second Lease Cancellation Agreement, the lack of any effective written or oral amendment of that agreement; and the lack of any actual or apparent authority of Jean Becker to amend the lease or the Lease Cancellation Agreement. Defendants' objection to FOF 49, to the extent that it is based on their objection to those other findings, must fail since those findings necessarily imply that Glenwood was acting consistently with its obligations under the contractual relationship. 511 West 232nd Owners' Corp., supra. The plaintiff had no obligation to tell the defendants — both attorneys at law — what position it would take in the future if a certain event were to happen; and the procedural "tactics" used by plaintiff in this litigation, even if not wholly in accord with the rules of practice, were rectified without prejudice to the defendants and hardly deprived the defendants of a fair trial or of receiving "the fruits of their contract." The defendants themselves were permitted to engage in some unusual litigation procedures with regard to proceeding pro-se and simultaneously appearing (in one case without benefit of a written appearance) as counsel for each other. To the extent that the somewhat disjointed counterclaim incorporates elements of a claim for vexatious litigation, it is premature. One of the elements of vexatious litigation (or, as denominated in New York, malicious prosecution) is favorable termination of the challenged litigation on the merits in favor of the complaining party. 59 New York Jurisprudence 2d False Imprisonment § 67, and cases therein cited. The defendants have obviously not satisfied that requirement.
See this Court's Memorandum of Decision on Plaintiff's Procedural Objections to Defendants' Objections to Findings of Fact dated July 8, 2005.
Defendants also ask the Court to make numerous additional findings, claimed to be based on undisputed evidence, in support of their counterclaim and contrary to FOF 49. As previously discussed herein, in the case of a fact finder's report, the reviewing court cannot make additional findings in the absence of a stipulation. Practice Book § 23-58(b).
Order
For the reasons stated herein the case is remanded to the fact finder pursuant to Practice Book § 23-58(a)(5) for the limited purposes of: (1) making findings as to the special defense of accord and satisfaction; (2) reconsideration of his findings as to the special defense of failure to mitigate damages, consistent with the foregoing discussion; and (3) reconsideration of his findings as to his award of attorneys fees, consistent with the foregoing discussion. The fact finder in his discretion may receive additional evidence as to these points.
(The Court also points out a minor mathematical error in FOF 40 where the two credits listed therein add up to $5,934.60 instead of $5,933.75)
So ordered.