19 PERRY STREET, LLC v. THE UNIONVILLE WATER COMPANY ET AL.

2008 Ct. Sup. 6752
No. HDSP-142747Connecticut Superior Court Judicial District of Hartford at Hartford
April 30, 2008

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION
PETER EMMETT WEISE, JUDGE.

I PROCEDURAL HISTORY
This is a summary process action commenced by a notice to quit and writ, summons and complaint served upon the defendants on June 4, 2007. The complaint alleges that the plaintiff, 19 Perry Street, LLC (Perry Street), is the owner of the property located at 19 Perry Street in Farmington (the premises), and that the defendants, the Unionville Water Company (Unionville Water) and Connecticut Water Service, Inc. (Connecticut Water), are in unlawful possession of part of the premises. The plaintiff alleges that the defendants’ possession is unlawful on alternative theories: (1) that the defendants once had a right to occupy the premises, but that privilege terminated; (2) that the defendants are in unlawful possession for failure to pay rent to the plaintiff; and (3) that Connecticut Water never had a right to occupy the premises. At present, the defendants continue to occupy the premises.

The defendants filed an answer and special defenses on August 17, 2007. In their special defenses, the defendants allege that the plaintiff cannot prevail in its summary process action by operation of the doctrines of equitable nonforfeiture. equitable estoppel and laches. The parties tried the matter before the court on November 14, 2007, and filed post-trial memoranda on January 11, 2008.

In its memorandum, the plaintiff argues that the defendants’ right to possession was terminated and that any claimed lease agreement is no longer in effect. If the court finds a valid lease to be in effect, the plaintiff urges the court to find that the defendants breached the lease by failing to pay rent to the plaintiff. Lastly, the plaintiff argues that Connecticut Water never had a right to occupy the premises. The plaintiff concludes that the defendants’ special defenses have no factual support, and thus fail. The defendants respond with the CT Page 6753 following arguments: (1) They have a valid lease that is enforceable against the plaintiff because the plaintiff had actual notice of the defendants’ lease; (2) the lease is valid because the defendants were not added as parties to the plaintiff’s foreclosure action; and (3) they did not breach their lease obligations to the plaintiff by failing to pay rent. If nevertheless found to have breached the lease, the defendants argue that they must prevail because they are entitled to remain in possession on theories of equitable nonforfeiture, equitable estoppel and laches. For the reasons discussed below, the court finds that the defendants’ lease agreement is enforceable against the plaintiffs. The court finds that the defendants breached that lease agreement by failing to pay rent. Lastly, the court finds that the defendants’ special defenses fail.

II FINDING OF FACTS
Based upon the credible evidence submitted by the parties, the court finds the following facts to have been proven. On February 20, 1975, Unionville Water entered into a ninety-nine-year lease agreement with Chas. W. House Sons, Inc. (House). (Def. Ex. A, February 20, 1975 lease.) Pursuant to their agreement, Unionville Water placed wells on and extracted water from a portion of the premises. There are five wells located at the site which draw water from the aquifer for treatment and distribution. Approximately 1,500,000 to 2,000,000 gallons of water are pumped each day from the defendants’ wells on the premises. House formerly maintained a manufacturing facility at the site. In connection with its operations, it used water purchased from Unionville Water. In 2004, House ceased operations. House made its final water payment in January 2004. Subsequently, House did not pay water invoices; they were returned by the postal service as undeliverable. Connecticut Water and Unionville Water learned that House’s telephone service became disconnected. Connecticut Water was aware that House was no longer in business or using water in 2004.

Connecticut Water acquired Unionville Water in 2002 and operated it as a subsidiary until 2006, when Unionville Water was merged into Connecticut Water. Both companies were created by special acts of the Connecticut General Assembly. Their purpose is to create exclusive service areas to undertake certain activities, including the taking and distribution of water for the public water supply. The water companies have been granted powers of eminent domain. See, e.g., General Statutes § 25-37a.

CT Page 6754 The February 20, 1975 lease agreement was amended on four subsequent occasions. (Collectively, Def Ex. A.) Neither the lease agreement nor any subsequent amendments were recorded on the Farmington land records until August 11, 2005, when they became part of an affidavit of facts relating to title or interest in real estate. (Pl. Ex. 5.) The affiant was the former vice-president of Unionville Water. According to Connecticut Water, the affidavit was filed on the land records because of a concern that subsequent owners of the property would quickly market the property to others who would have no knowledge of the unrecorded lease, as amended.

Perry Street is a limited liability company that was created for the acquisition of the premises. Members of the company include Frank M. Rocco, Jr., Joseph P. Yamin and Dwayne Crisco. David L. Radka is the manager of water resources and planning for Connecticut Water.

Liberty Bank (Liberty) is a Connecticut banking corporation. On January 25, 1995, a mortgage deed was executed in favor of Liberty for the premises by House. (Def. Ex. B.) The mortgage deed was recorded on the Farmington land records. The deed identifies Unionville Water’s otherwise unrecorded lease agreement as an encumbrance. The leasehold interest created by the 1975 lease agreement as amended predates the 1995 mortgage deed.

In the fall of 2003, Crisco made a telephone call to Radka. Crisco informed him that the plaintiff was interested in purchasing the mortgage on the premises from Liberty. Crisco made inquiries concerning lease payments. In written correspondence dated March 17, 2004 (Def. Ex. C.), March 29, 2004 (Def. Ex. D.), April 13, 2004 (Def. Ex. E.), and April 15, 2004 (Def. Ex. F.), Yamin and Radka negotiated the potential sale of the portion of the premises containing the wells to Connecticut Water. The negotiations failed and communications ended with Connecticut Water’s April 15, 2004 letter. In that letter, Radka wrote to Yamin, stating that Connecticut Water “will, of course, continue to operate under its lease agreement. Please contact me or Mr. Thomas Mongillo of our Unionville office if and when Perry Street acquires title to the property (my understanding from Mr. Crisco was that this had yet to occur) so that we may update our records to ensure that the proper lease credits continue to be applied. Also, please feel free to contact me if you wish to discuss lease payments in lieu of such credits, under the terms of the amended agreement.”

Yamin did not respond to this letter. Connecticut Water made no further attempts to pursue the issue any further. The next written communication between the parties was the notice to quit served upon the CT Page 6755 defendants on April 17, 2007, by Perry Street. (Pl. Ex. 7.) As evidenced by their 2003 and 2004 communications with the defendants, members of Perry Street had knowledge of the lease agreement prior to acquiring the assignment of the mortgage from Liberty.

On December 23, 2003, Liberty assigned all of its interest in the mortgage deed for the premises, dated January 25, 1995, to Perry Street. (Pl. Ex. 1.) Perry Street paid $600,000 for the assignment. Perry Street foreclosed on the mortgage. Neither Connecticut Water nor Unionville Water was a party to the foreclosure proceedings. Title became absolute in Perry Street on March 30, 2005. The plaintiff filed a certificate of foreclosure on the Farmington land records on April 13, 2005, approximately four months before Connecticut Water’s affidavit of facts concerning the lease agreement was recorded. (Pl. Ex. 3.) Connecticut Water claims that it instructed its attorney to make periodic searches of the land records during this period of time. Connecticut Water was unable to satisfactorily explain why it did not become aware of the certificate of foreclosure.

The February 20, 1975 lease agreement provided that Unionville Water would pay monthly rent in an amount equal to 33 percent of House’s average annual water cost. (Def. Ex. A, February 20, 1975 lease, ¶ 5.) A formula for calculating the average annual water cost was set forth. (Def. Ex. A, February 20, 1975 lease, ¶ 15.) The lease also provided that “[i]n the event that House shall change its operations so as to substantially reduce its average annual water consumption, monthly rental after such change shall be determined as if House’s average annual consumption of water were the same as the highest average annual consumption used in computing the rent for any month prior to the reduction in consumption.” (Def. Ex. A, February 20, 1975 lease, ¶ 6.) In 2004, House ceased its operations and stopped using water. This was a “change [in] its operations so as to substantially reduce its average annual water consumption.” (See Def. Ex. A, February 20, 1975 lease, ¶ 6.) Paragraph six of the lease agreement was never amended.

On November 30, 1978, the lease was amended for the third time. In relevant part, paragraph five of the 1978 lease agreement was amended through the addition of the following language: “Rent shall be paid by Water Company by deducting the amount due quarterly from House’s water bill each quarter.” (Def. Ex. A, November 30, 1978 Amendment, ¶ 2.) This resulted in House receiving a credit on its water bill in lieu of rental payments in cash.

On February 12, 1990, the lease was amended for a fourth time. Paragraph five, including the 1978 amendment, was deleted in its CT Page 6756 entirety. Substituted in its place was the following: “Commencing on the first day of February 1990, and on the first day of each third month thereafter, the Water Company shall pay to House as rent a quarterly amount equal to seventy-four and one-tenth (74.1%) percent of House’s actual water cost for the prior three (3) months.” (Def. Ex. A, February 12, 1990 Amendment, ¶ 2(b).) Thus, the practice of paying rent by crediting House’s water bill was abolished. However, the actual practice continued until House stopped using water when it ceased operation in 2004.

On April 17, 2007, and April 27, 2007, notices to quit were served on Unionville Water and Connecticut Water. (Pl. Ex. 7.) These notices to quit are legally sufficient. The notices to quit instruct the defendants to quit possession or occupancy of the premises on or before May 18, 2007. The reasons stated in the notice are “nonpayment of rent,” “termination of a right or privilege to occupy the premises,” and “no right or privilege to occupy such premises.”

Connecticut Water remains in possession of the portion of the premises identified in the lease agreement. It continues to draw water from the five wells located at the site. The water is processed and sold by Connecticut Water to its customers. This water represents approximately one-half of Unionville’s daily water supply requirements. Since March 30, 2005, to the time of trial, the defendants have not paid any rent or made any use and occupancy payments to Perry Street. Because water usage stopped in 2004, paragraph six of the 1978 lease agreement controls the calculations concerning rental payments due to Perry Street. According to Connecticut Water’s calculations, the amount of rent due is between $52,488.28 and $60,300.25, depending upon the length of the period over which rent is due. (Def. Ex. H I.) If the defendants’ defense of this summary process action is unsuccessful, they intend to exercise their power of eminent domain to acquire title to the premises.

III DISCUSSION
“[S]ummary process is a special statutory procedure designed to provide an expeditious remedy . . . It enable[s] landlords to obtain possession of leased premises without suffering the delay, loss and expense to which, under the common-law actions, they might be subjected by tenants wrongfully holding over their terms . . . Summary process statutes secure a prompt hearing and final determination . . . Therefore, the statutes relating to summary process must he narrowly construed and strictly followed . . . CT Page 6757

General Statutes § 47a-23(a), which governs summary process actions, provides in relevant part: `When the owner or lessor . . . desires to obtain possession or occupancy of any land or building, any apartment in any building, [or] any dwelling unit . . . and (1) when a rental agreement or lease of such property, whether in writing or by parol, terminates for any of the following reasons: (A) By lapse of time; (B) by reason of any expressed stipulation therein . . . (E) nonpayment of rent when due for commercial property . . . or (3) when one originally had the right or privilege to occupy such premises but such right or privilege has terminated . . . such owner or lessor . . . shall give notice to each lessee or occupant to quit possession or occupancy of such land, building, apartment or dwelling unit . . .’ General Statutes § 47a-23(b) also directs that a notice to quit shall include the reasons that the lessee or occupant must quit the premises, using the statutory language or words of similar import.

(Citation omitted; internal quotation marks omitted.) Bristol v. Ocean State Job Lot Stores of Connecticut, Inc., 284 Conn. 1, 5-6, 931 A.2d 837 (2007).

A. The Lease Agreement is Valid Against Perry Street 1. Plaintiff’s Actual Knowledge of the Existence of the Lease Agreement
The plaintiff first argues that the lease between House and Unionville Water is not enforceable against Perry Street, and that the defendant simply has no right to occupy the premises. General Statutes § 47-19
provides that “[n]o lease of any building, land or tenement, for life or for any term exceeding one year or which provides for the renewal thereof or an option to purchase such building, land or tenement, shall be effectual against any persons other than the lessor and lessee and their respective heirs, successors, administrators and executors, unless it is in writing, executed, attested, acknowledged and recorded in the same manner as a deed of land . . .” (Emphasis added). “A lease that conveys an interest in land for more than one year is not effectual against a bona fide purchaser of the leased land unless the lease is CT Page 6758 recorded on the land records or the purchaser has actual notice of the lease prior to purchase . . . A bona fide purchaser is a buyer who pays a full and fair price for property without notice that a third party has an interest in that property . . . A purchaser has actual notice if he knows facts sufficient to put a reasonable person on inquiry which, if prosecuted with reasonable diligence, would certainly lead to discovery of a conflicting claim.” (Citations omitted; internal quotation marks omitted.) Clean Corp. v. Foston, 33 Conn.App. 197, 201-02, 634 A.2d 1200
(1993).

The plaintiff filed a certificate of foreclosure on the Farmington land records on April 13, 2005. The lease agreement between House and Unionville Water, although entered into three decades prior, was not recorded on the Farmington land records until August 11, 2005. A bona fide purchaser without actual notice of the lease agreement could claim that the lease was not effective against them. Nevertheless, as noted above, the plaintiff in this case had actual notice of the lease agreement prior to purchasing the mortgage deed from Liberty, and prior to obtaining ownership of the premises. First, the recorded mortgage deed that the plaintiff purchased from Liberty in 2003 identifies Unionville Water’s unrecorded lease agreement as an encumbrance. Additionally, in correspondence between the plaintiff and Connecticut Water over one year before the plaintiff acquired title to the premises, Yamin proposed a sale of the premises to Connecticut Water subject to inter alia, the following condition: “5. Tenancies-Seller is responsible for delivery of the premises free and clear of all existing tenants except Buyer’s present tenancy.” (Emphasis added; Def. Ex. C.) The plaintiff repeats this clause in its April 13, 2004 correspondence. (Def. Ex. H.) In correspondence dated March 29, 2004, Radka notes that Unionville Water “presently leases [the premises] for public water supply purposes. While [Unionville Water’s] lease-hold runs for another seventy years, or so, we believe acquisition of a portion of the property may be in our best long-term interest.” (Def. Ex. D.) Lastly, on April 15, 2004, in response to the April 13, 2004 correspondence, Radka wrote that Connecticut Water “will, of course, continue to operate under its lease agreement. Please contact me . . . if and when Perry Street acquires title to the property . . .” (Emphasis added; Def. Ex. F.) The plaintiff does not allege that it did not receive any of the defendants’ correspondence.

The plaintiff had actual notice of Unionville Water’s tenancy on the premises prior to its acquisition of title to the premises. Correspondence from Radka, and the plaintiff’s own statements demonstrate this, Thus, the plaintiff cannot maintain the position that it is a bona fide purchaser, and that the lease agreement is not CT Page 6759 enforceable against it for failure to record the lease or for want of notice. See Clean Corp. v. Foston, supra, 33 Conn.App. 202.

2. The Plaintiff’s Strict Foreclosure on the Premises did not Terminate the Lease Agreement
The plaintiff also argues that Unionville Water’s lease agreement was terminated as a necessary result of the plaintiff’s foreclosure on the premises. In support of this position, the plaintiff relies upo Federal Home Loan Mortgage Corp. v. Van Sickle, 52 Conn.App. 37, 726 A.2d 600 (1999), in which the court held that, following foreclosure, “[a]s a title holder, in the absence of an agreement to the contrary, the mortgagee has a right to immediate possession against its mortgagor . . . and hence also against a tenant who derives his interest from the mortgagor.” (Internal quotation marks omitted.) Id., 42. Further, General Statutes § 47a-27 provides that “[t]he remedy provided by this chapter in favor of lessors shall extend to all persons deriving title from the lessor or lessee of any land . . . and to the mortgagee of any land . . . after his title has become absolute by foreclosure, and to all persons deriving title from him, or from the mortgagor.” Thus, the plaintiff argues, because the defendants’ claimed leasehold derives from House, once the plaintiff acquired the right to occupy the premises as against House, it also acquired the right to possess the premises against any party who derives a possessory interest in the premises from House, namely, the defendants.

The plaintiff’s analysis, however, is incomplete. Not all leaseholds are terminated in a strict foreclosure, for “[t]he lease of a mortgagor’s tenant, if the lease was subsequent to the mortgage, is extinguished upon foreclosure by the mortgagee and the passing of the law days without a redemption.” (Emphasis added; internal quotation marks omitted.) Federal Home Loan Mortgage Corp. v. Van Sickle, supra, 52 Conn.App. 41. That is, if a lease is entered into before a mortgage is issued, a foreclosure on the mortgagor does not extinguish the lessee’s tenancy. This scenario is exemplified here, where the lease agreement was recorded as an encumbrance on the mortgage deed, itself. (Def. Ex. B, Vol. 494, p. 481, ¶ 6.) The defendants cite to General Statutes § 49-22(a), which provides that “[i]n any action brought for the foreclosure of a mortgage or lien upon land, or for any equitable relief in relation to land, the plaintiff may, in his complaint, demand possession of the land, and the court may, if it renders judgment in his favor and finds that he is entitled to the possession of the land, issue execution of ejectment, commanding the officer to eject the person or persons in possession of the land and to put in possession thereof the plaintiff or the party to the foreclosure entitled to the possession by CT Page 6760 the provisions of the decree of said court, provided no execution shall issue against any person in possession who is not a party to the action except a transferee or lienor[1] who is bound by the judgment by virtue of a lis pendens.”

The defendants were not parties to the plaintiff’s foreclosure action. Liberty’s mortgage deed postdates the lease agreement and was issued subject to the lease agreement. Accordingly, General Statutes § 49-22(a) does not act to extinguish the lease agreement; the lease agreement survived the plaintiff’s foreclosure.

3. Connecticut Water had the Right to Occupy the Premises
Relying heavily upon its argument that its foreclosure terminated the lease agreement, the plaintiff next argues that Connecticut Water, now the sole occupant of the premises following its 2006 merger with Unionville Water, never had a right to occupy the premises. The plaintiff argues that this is because the lease agreement with Unionville Water was terminated upon title vesting in the plaintiff on March 30, 2005, following foreclosure. Thus, because Unionville Water’s merger with Connecticut Water occurred after title to the premises vested in the plaintiff, Connecticut Water never had any right to occupy the premises, and the plaintiff must prevail pursuant to General Statutes § 47a-26d.

General Statutes § 47a-26d provides in relevant part that “[i]f, on the trial of a summary process complaint it is found that the defendant is the lessee of the complainant and holds over after the termination of the lease or rental agreement or, if there was no lease or rental agreement, that the defendant is the occupant of such premises and has no right or privilege to occupy the same and that notice to quit has been given as provided in this chapter, yet that the defendant holds possession or occupancy after the expiration of the time specified in such notice to quit, . . . the court shall forthwith enter judgment that the complainant recover possession or occupancy of the premises with his costs . . .” For the plaintiff to prevail on this theory, however, the court must find that there is no valid lease agreement between the parties. As noted above in parts III A 1 and 2 of this memorandum, the plaintiff took title to the premises subject to the lease agreement because it had actual notice of the agreement prior to its foreclosure action. Thus, following the foreclosure, but prior to the 2006 merger between Unionville Water and Connecticut Water, a valid lease existed between the plaintiff and Unionville Water. When Unionville Water merged with Connecticut Water, any rights and obligations, including CT Page 6761 leaseholds, that Unionville Water then possessed passed to Connecticut Water. See Chainlink Corp. v. Merritt Extruder Corp., 96 Conn.App. 183, 187-88, 899 A.2d 90 (2006).

In summary, as to the plaintiff’s claims alleging termination of the defendants’ right or privilege to occupy premises pursuant to General Statutes § 47a-23(a)(3),[2] the court finds that the plaintiff had actual notice of the lease agreement, and that the lease agreement is valid as to both defendants. Therefore, the plaintiff’s claims alleging termination of the right or privilege to occupy the premises, counts one (against Unionville Water) and three (against Connecticut Water) of the plaintiff’s complaint, fail as to both defendants. Further, count five of the complaint, alleging that Connecticut Water never had a right or privilege to occupy the premises, likewise fails.

B. The Defendants Are In Breach of Their Obligation to Pay Rent

In a summary process action based on nonpayment of rent in a commercial setting, the landlord must prove, by a fair preponderance of the evidence, all the elements of the case. The essential elements are: (1) On or about a certain date, the landlord and the tenant entered into an oral or written, lease/rental agreement for a weekly/monthly/yearly term for use and occupancy of a certain premises; (2) The tenant agreed to pay an agreed upon rent by a certain date; (3) The tenant took possession of the promises pursuant to the lease; (4) The tenant failed to pay the rent due under the lease by a certain date; (5) The landlord caused a proper Notice to Quit Possession to be served on the tenant to vacate the premises on or before a certain termination date; and (6) Although the time given in the Notice to Quit Possession of the premises has passed, the tenant remains in possession of the premises.

Qeriqi v. Slep, Superior Court, judicial district of Hartford, Housing Session, Docket No. HDSP 141726 (November 20, 2007, Peck, J.); see als T.J.L., LLC v. Kelly, Superior Court, judicial district of Hartford, Housing Session, Docket No. HDSP 136536 (January 2, 2007, Bentivegna, J.); General Statutes § 47a-23(a)(1)(E).

CT Page 6762 The plaintiff next argues that if the court finds a valid lease between the plaintiff and the defendants, then the court must find that the defendants breached the lease agreement by failing to pay rent to the plaintiff, and that, therefore, the defendants should be evicted from the premises pursuant to General Statutes § 47a-23. As described above, this requires the court to determine what rent, if any, was due to the plaintiff, what method of payment was required for any such payments, and lastly, whether the defendants breached the lease agreement for failure to pay rent due.

1. The Plaintiff had No Duty to Notify the Defendants that Rent was Owed Under Paragraph Six of the Lease Agreement

The plaintiff’s claim to rent owed by the defendants is based upon paragraph six of the lease agreement (which was never amended), which provides that “[i]n the event that House shall change its operations so as to substantially reduce its average annual water consumption, monthly rental after such change shall be determined as if House’s average annual consumption of water were the same as the highest average annual consumption used in computing the rent for any month prior to the reduction in consumption. To the consumption figure so derived shall be applied the then prevailing rates of [Unionville Water] in the same manner as is provided in paragraph 5 above.” The plaintiff argues that in July 2004, when House ceased its operations and water usage, there was the substantial reduction in House’s annual water consumption contemplated in paragraph six, causing rental payments at the higher rate to become due. The defendants raise two arguments in reply: first, paragraph six was not triggered, and second, if triggered, it was the plaintiff’s duty to notify the defendant of any substantial reduction in water consumption because Connecticut Water has no way to determine when such a substantial change occurred.

As to the defendant’s first argument, that paragraph six was never triggered, the defendants note that House’s quarterly water charges have at times fluctuated over the course of the lease agreement, from over $4,000 in 1992, to approximately $2,300 in 1996; to over $4,000 in 2000, to less than $300 in early 2004. The defendants argue that these fluctuations were acceptable to the parties without resort to paragraph six; this is why the measure of substantial change is based upon average annual water consumption, and why the increased rate is calculated over such a long period of time. The court finds that this argument is not persuasive based upon the established facts. In 2004, House’s water consumption did not drop 50 percent, it dropped to zero, and has remained at zero. Accordingly, a more obvious example of a substantial reduction in water consumption is difficult to contemplate. CT Page 6763

The defendants argue that “it is consistent with Paragraph 5 that a temporary cessation in water use might result in no rent becoming due for some period of time.” Thus, they were not delinquent in their rental payments, but rather, for the period where House had no water consumption, 74.1 percent of $0 in water consumption equals $0 due in rent. While this position might be plausible for a short period of time, it is not under the present facts. Based on the undisputed facts that House ceased all water use since early 2004, the court finds that a substantial reduction in House’s annual water consumption occurred, invoking the payment schedule of paragraph five of the lease agreement as modified by paragraph six.

The defendants next argue that it was the plaintiff’s responsibility to notify the defendants of a substantial change in water consumption, but they cite no legal authority or lease provision for this proposition. The defendants point only to the fact that they asked for such notice when, in Connecticut Water’s April 15, 2004 letter to the plaintiff, it asked the plaintiff to contact Connecticut Water if and when the plaintiff acquired title to the property and to contact Connecticut Water to discuss lease payments in lieu of credits under the terms of the amended agreement. The court finds that in this case, the plaintiff was not required to give notice to the defendants that rent was due. General Statutes § 47a-23 requires only that the landlord establish the existence of a lease, that the tenant agreed to pay rent by a certain date, that the tenant took possession, that the tenant failed to pay rent under the terms of the lease, and that the landlord properly served a notice to quit, but the tenant remains in possession Qeriqi v. Slep, supra, Docket No. HDSP 141726.

As described above, House ceased operations in 2004, and made its final water payment in January 2004. Subsequently, water invoices were not paid by House and were returned by the postal service as undeliverable. Connecticut Water and Unionville Water learned that House’s telephone service had become disconnected. Connecticut Water was aware that House was no longer in business or using water in 2004. This knowledge, triggering the language of paragraph six, required rental payments in the amount of 74.1 percent of House’s “highest average annual consumption used in computing the rent for any month prior to the reduction in consumption.” Accordingly, rent was due to the plaintiff under paragraph six of the lease agreement. There remains disagreement, however, as to the proper form of rental payments. The plaintiff claims it was entitled to cash payments, while the defendants, as reflected in their April 15, 2004 letter, believe that rent in the form of water credits was appropriate. CT Page 6764

2. The Plaintiff Was Entitled to Cash Rental Payments, Not Credits

As described above in the court’s findings of fact, the third amendment of the lease agreement, in paragraph five, called for Unionville Water to pay rent to House by crediting House’s water bill based upon House’s water consumption. The final version of paragraph five, adopted on February 12, 1990, eliminates the previous paragraph five in its entirety and requires Unionville Water to pay rent based upon a different formula, 74.1 percent of House’s actual water cost, calculated quarterly. The final version of paragraph five does not contain any language permitting Unionville Water to reimburse House by crediting House’s water bill. That language from the previous version of the lease was specifically removed. There is no provision for rental payments by water credits under any scenario in the operative form of the lease agreement.

There appears to be confusion over the final paragraph five, as exhibited by the conduct of both House and Unionville Water following its adoption. In their post-trial memorandum, the defendants state that, consistent with their April 15, 2004 letter, that

[w]ithout the change in operations to trigger cash payments, Paragraph 5 would remain in effect and Connecticut Water would continue applying the quarterly credits to the new party’s bills.
In the absence of notice from House that it had experienced a change in operations, Connecticut Water continued to adhere to its obligations under Paragraph 5 . . . A bill showing zero usage simply meant a credit of zero dollars.
Paragraph 5 of the 1990 Amendment to the original lease indicates that Unionville Water would pay rent in the amount of 74.1% of House’s quarterly water usage charges. The parties intended these payments to be made by crediting the appropriate amount to House’s water bill . . . The express terms of the 1990 Amendment and the course of the parties’ dealings show that House was willing to assume the risk that Connecticut Water’s rent that is, the amount it credited to House’s bills would rise and fall with House’s actual usage.

CT Page 6765

The defendants misinterpret paragraph five. This provision does not provide for credits to House’s water bill, but only for cash payments as rent whether or not paragraph six is “triggered.” The defendants argue that the court should look to the conduct of the parties in construing the contract to call for credits rather than rental payments, and that “[i]n construing the intended meaning of terms in a contract, the conduct of the parties regarding their use is a proper consideration.”Lar-Rob Bus Corp. v. Fairfield, 170 Conn. 397, 407-08, 365 A.2d 1086
(1975); see also Colliers, Dow Condon, Inc. v. Schwartz, 77 Conn.App. 462, 468, 823 A.2d 438 (2003). However, “a presumption that the language used is definitive arises when . . . the contract at issue is between sophisticated parties and is commercial in nature.” United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 670, 791 A.2d 546
(2002). The conduct of the parties will not control over contradictory language in the contract: “A lease is a contract. In its construction, three elementary principles must be kept constantly in mind: (1) the intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible . . . In determining the meaning and effect of the controverted language in the lease, the inquiry must focus on the intention expressed in the lease and not on what intention existed in the minds of the parties.”Tinaco Plaza, LLC v. Freebob’s, Inc., 74 Conn.App. 760, 767, 814 A.2d 403, cert. granted on other grounds, 263 Conn. 904, 819 A.2d 840 (2003) (appeal dismissed February 4, 2004).

“Given that the purpose of judicial interpretation is to ascertain the parties’ intentions, the parties’ own practical interpretation of the contract — how they actually acted, thereby giving meaning to their contract during the course of performing it can be an important aid to the court — Courts . . . give great weight to the parties’ . . . practical interpretation . . . unless it is contrary to the plain meaning of the contract.” (Emphasis added.) Putnam Park Associates v. Fahnestock Co., 73 Conn.App. 1, 10-11, 807 A.2d 991 (2002); see also 11 S. Williston, Contracts (4th Ed. Lord. 1999) § 32:14, p. 491-501.

Since 1990 House’s water bills reflect that the defendants’ rent was paid in the form of credits, rather than cash. Such conduct is contrary to the clear language of the contract, which, after its final amendment, strikes out the credit provision and provides only for cash payments. However, rent in the form of cash payments became due under paragraph CT Page 6766 six of the lease agreement after House discontinued its water use.[3]
3. The Defendants Failed to Tender Rent to the Plaintiff and Are in Breach of the Lease Agreement

The defendants never paid any rent to the plaintiff. However, there are circumstances where a tenant is not at fault for a failure to pay rent. “It is essential in a summary process action initiated because of the nonpayment of rent that the plaintiff landlord prove, in order to prevail, that there had been no tender or its legal equivalent before the declaration of a forfeiture by some unequivocal act by the landlord, such as the service of a notice to quit based on such alleged nonpayment.” T.J.L., LLC v. Kelly, supra, Docket No. HDSP 136536. “A tender is an offer to pay a debt or discharge a duty, the offer to pay involves, as a general rule, the actual production of the money and the placing of it in the power of the person entitled to receive it.”Mayron’s Bake Shops, Inc. v. Arrow Stores, Inc., 149 Conn. 149, 155-56, 176 A.2d 574 (1961); see also Lind-Larsen v. Fleet National Bank of Connecticut, 84 Conn.App. 1, 12, 852 A.2d 799 (2004) (tender of money must be unconditional and unqualified).

“Our Supreme Court [restated] the general rule that although the money for the payment of the debt must be actually produced and given to the creditor, when its production is prevented by the creditor himself or dispensed with by his refusal to receive it or by language or conduct by word or act tantamount to such refusal, then the tender is valid because no person is required to do a futile act . . .” The doctrine of tender as articulated by the Supreme Court . . . has been applied consistently to rental payments made by tenants to their landlords where the tenant had attempted to pay the rent by check in good faith and in pursuance of an implied agreement and custom then existing between [the tenant] and the plaintiff [landlord].” (Citation omitted; internal quotation marks omitted.) T.J.L., LLC v. Kelly, supra, Docket No. HDSP 136536; see als Mayron’s Bake Shops, Inc. v. Arrow Stores, Inc., supra, 149 Conn. 156 Burrit v. Lunny, 90 Conn. 491, 496, 97 A. 756 (1916).

In defending their nonpayment of rent as neither wilful nor grossly negligent (as discussed in part C 1 of this opinion), the defendants state that they were “stockpiling” the estimated rent due while periodically searching the land records for a change in ownership of the premises. They state in their post-trial memorandum that “[a]s late as July 28, 2005 [four months after the plaintiff acquired title to the premises], Connecticut Water’s searches indicated that House was still the owner of record.” The defendants attempt to argue that without notice of a new landlord, they cannot reasonably be expected to pay rent CT Page 6767 to the plaintiff. While there appeared to be an established course of dealing between the parties concerning method of payment of credits rather than cash payments, the defendants were still required to pay rent pursuant to the lease agreement. Once House’s water consumption fell to zero, payments calculated under paragraph six became due. Because House’s water consumption was zero, water credits could not compensate the defendants’ landlord for due rent. Further, following the cessation of House’s water usage in 2004, there is no evidence that the defendants applied credits to House’s water bill in any amount. In their memorandum, the defendants argue that “[a] bill showing zero usage simply meant a credit of zero dollars.” The court finds that this is not the case, and that the defendants were required to, but did not, pay rent pursuant to paragraph six of the lease agreement. Had the defendants tendered rental payments to the party they believed to be the landlord, House, they could maintain any defense against a subsequent owner that was available against the previous owner, including tender of rent, if the subsequent owner did not notify the tenant of their acquisition of title. 52 C.J.S., Landlord and Tenant § 547 (1968) Anderson v. Island Creek Coal Co., 297 F.Sup. 283 (W.D.Ky. 1969) Washoe County Bank v. Campbell, 41 Nev. 153 (1917). However, because the defendants did not tender rental payments to anyone in any form once they became due under paragraph six, they cannot prevail by arguing that their nonpayment of rent was due to the lack of notice by the plaintiff upon acquiring title to the premises. Notice played no role in the defendants’ failure to pay rent.

Accordingly, as to the plaintiff’s claims that the defendants failed to pay rent and are in breach of the lease agreement, counts two (against Unionville Water) and four (against Connecticut Water) of the plaintiff’s complaint, the court finds the defendants are in breach of the lease agreement and that rent in the form of cash payments and not credits was due, despite the plaintiff’s failure to notify the defendants that it had acquired title to the premises.

C. The Defendants’ Equitable Defenses Fail
The defendants raise the equitable defenses of nonforfeiture, estoppel and laches, should the court find, as it has, that rent was owed and unpaid, and that the defendants breached the terms of their lease agreement. “Connecticut Appellate and Superior Courts have applied the ancient equitable doctrine against forfeitures to summary process actions for nonpayment of rent and have occasionally, on the particular facts of each case, granted relief to the tenant . . . “The factors considered by these courts in deciding whether to grant equitable relief in nonpayment cases are those suggested by Justice Story in his learned CT Page 6768 treatise [3 J. Story, Equity Jurisprudence (14th Ed.)], namely, (1) whether, in the absence of equitable relief, one party will suffer a loss `wholly disproportionate to the injury to the other party’; . . . and (2) whether the injury to the other party is reparable.

“A court of equity will apply the doctrine of clean hands to a tenant seeking such equitable relief; thus, a tenant whose breach was `wilful’ or `grossly negligent’ will not be entitled to relief.” (Citations omitted; internal quotation marks omitted.) Fellows v. Martin, 217 Conn. 57, 66-67, 584 A.2d 458 (1991).

1. Equitable Nonforfeiture

The first equitable defense raised by the defendants is nonforfeiture. “[E]quitable principles barring forfeitures may apply to summary process actions for nonpayment of rent if (1) the tenant’s breach was not wilful or grossly negligent; (2) upon eviction the tenant will suffer a loss wholly disproportionate to the injury to the landlord; and (3) the landlord’s injury is reparable . . .

“[T]he doctrine against forfeitures applies to a failure to pay rent in full when that failure is accompanied by a good faith intent to comply with the lease or a good faith dispute over the meaning of a lease.” Cumberland Farms, Inc. v. Dairy Mart, Inc., 225 Conn. 771, 778, 627 A.2d 386 (1993).

The defendants attempt to analogize their position to the defendant i Cumberland Farms, Inc. v. Dairy Mart, Inc., supra, 225 Conn. 771. There, a commercial tenant did not pay rent to a landlord for nineteen months, but did tender the amount due within thirty days of the landlord’s demand. Our Supreme Court found that the tenant had not acted wilfully and granted equitable relief. The present case, however, while in some ways similar to Cumberland Farms, is distinguishable in several important respects. In Cumberland Farms, the tenant was not notified of a change in landlord. However, the tenant continued to send rental payments to the party it believed to be the landlord. Once the former landlord stopped forwarding the tenant’s rental payments to the current landlord and began returning the tenant’s rental payments, the tenant initiated contact with the party whom it knew to be in the process of becoming the current landlord, if not already, in order to verify that the payments under the lease were owed to the plaintiff and to determine now to address future payments. In the present case, the defendants breached the lease agreement by failing to pay rent. While the 1990 lease amendment called for cash payments rather than credits, it appears that the mutually accepted course of dealing by the parties was for the CT Page 6769 defendants to pay rent due in the form of water usage credits. Once House’s water bill dropped to zero, the defendants were no longer compensating House in any form, despite the requirements in paragraph six of the lease agreement. The defendants continued to occupy and extract water from the premises. The defendants claim that in satisfaction of their obligation to pay rent following the cessation of House’s water consumption, the defendants began “stock piling” rent that might be due, and they continually sought out any change in ownership of the premises by searching the Farmington land records. However, the defendants’ conduct falls far short of actually tendering the rent due, in any form, to any party.

a. The Defendants’ Conduct Was Wilful and Grossly Negligent
“However the word `wilful’ is defined, it connotes a degree of intent, purpose or design . . .” Pondy Associates v. Max’s Oyster Bar, LLC, Superior Court, complex litigation docket at Hartford, Docket No. X07 CV 07 4028205 (July 27, 2007, Berger, J.), cert. denied, 285 Conn. 919, 943 A.2d 1099 (2008). The defendants were required either to tender payment to the party they claim they believed to be the current landlord, House, or to contact the plaintiff, with whom the defendants had previously been in contact. Had the defendants sent rental payments to House following the substantial change in its water consumption in 2004, perhaps their situation would be analogous to the defendant i Cumberland Farms. In light of the facts as the court has found them, however, the two situations are quite dissimilar, and the defendants’ failure to pay rent was wilful.

Gross negligence is commonly defined as very great or excessive negligence, or as the want of or failure to exercise, even slight or scant care or slight diligence. Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 337-38, 885 A.2d 734 (2005); 57A Am.Jur.2d 296, Negligence § 227 (2004). In the present case, the court finds that the defendants acted with gross negligence. As described above, the premises provides half of the daily water needs for the Unionville water system, approximately 1,500,000 to 2,000,000 gallons of water per day are pumped from the wells on the premises. The water from the premises is critical to the Unionville water supply. However, the defendants did not contact the plaintiff at any time between April 2004, and receipt of the notice to quit in June 2007. During this period of time, the defendants made no effort to pay rent for the premises to anyone, nor did they seek out House, then believed to be the owner, to make rental payments. The amount of rent due according to the defendants’ calculation is relatively small in comparison to the necessity of maintaining the CT Page 6770 adequacy of the Unionville water supply.

The defendants have been granted, by special acts of the Connecticut legislature, the exclusive right to take and distribute water to the public. The defendants’ actions in this case have jeopardized the public water supply. It is the defendants’ responsibility to provide adequate levels of safe drinking water to their consumers, See generally, General Statutes § 25-32. The defendants acknowledge this overwhelming public need. The court finds, therefore, that defendants’ failure to show any diligence in executing this critical duty demonstrates gross negligence, and does not entitle the defendants to equitable non-forfeiture relief.

The trial court in Cumberland Farms summarized that “[t]his is not a case where a tenant knowingly neglected to pay its rent for nineteen consecutive months. It is a case where, as a result of a major corporate acquisition involving 600 gasoline stations in ten states, including the sublease for the premises, there was confusion about the identity of the landlord and where to send rental payments. The tenant diligently sought to obtain the necessary information from a confused landlord, who could not calculate the amount owed for seven months after the tenant had requested it. Throughout the entire period of nonpayment the tenant consistently affirmed its intention and willingness to pay the rent and did tender the arrearage within approximately thirty days after the calculations were finally provided.” (Internal quotation marks omitted.)Cumberland Farms, Inc. v. Dairy Mart, Inc., supra, 225 Conn. 777.

The present case is one where the tenant has not paid rent for approximately thirty-one months and did not even attempt to pay rent until served with a notice to quit. While the defendants did search the land records periodically in search of any change in ownership of the premises, they were not able to satisfactorily explain why they did not become aware of the certificate of foreclosure filed by the plaintiff. It is true that the plaintiff could have contacted the defendants and informed them of their acquisition of title to the premises, but the defendants’ failure to tender any rent due over an extended period of time constituted intentional breach of the lease agreement, and therefore disqualifies the defendants from relief under the doctrine of equitable non-forfeituire. The defendants’ argument that contact from the plaintiff was required to calculate the rent due is unconvincing, for the defendants were in the best position to determine what House’s highest annual water consumption was, and therefore what rent was due.

b. The Defendants’ Injury Is Not Wholly Disproportionate to That of the Plaintiff
CT Page 6771 The second element of a claim for equitable non-forfeiture is that if evicted, the tenant will suffer a loss wholly disproportionate to the injury to the landlord. The defendants argue that this is the case here, for if evicted, the defendants

would lose the value of the sixty plus remaining years on its lease . . . In addition, Connecticut Water currently extracts from the Property one and a half to two million gallons of water per day . . . If it were forced to quit possession, Connecticut Water would lose half of its Unionville System water supply . . . Eviction also means that Connecticut Water would lose the benefit of any and all investments in the Property it has made that enable it to extract the water . . .
Not being able to use the wells on the Property would also mean Connecticut Water would be forced to try to find a comparable source of water in another location . . . What is clear is that Connecticut Water would incur great expense just to undertake a search.
Radka also testified that if Connecticut Water was evicted, because of `the overwhelming public need,’ it would `have no other obligation but to . . . initiate eminent domain proceedings . . .’ A taking by eminent domain would require it to expend considerable sums on legal and expert fees. Even assuming that the eminent domain proceedings are successful, Connecticut Water would then be saddled with the burden of owning the Property outright as opposed to holding a leasehold interest.

The defendants now argue that equity requires the court to keep them in possession because eviction would result in a wholly disproportionate injury to the tenant. However, the necessity of their continued tenancy required greater diligence on the defendants’ part. The plaintiff argues that because the defendants will initiate eminent domain proceedings and would not vacate the premises if ordered to quit possession, the defendants would suffer no injury at all. If the defendants are forced to initiate eminent domain proceedings, they will experience some expense. As owners of the premises, they might also face an increase in CT Page 6772 overall expense because of carrying costs. The court finds that, on balance, any increased expense that the defendants might incur through eminent domain proceedings does not here constitute a wholly disproportionate injury. If judgment enters in favor of the plaintiff, the defendants will either continue in possession of the premises and initiate eminent domain proceedings, or extract the needed water from another source. Equity does not require non-forfeiture to save the defendants some expense, especially where that expense is incurred only as a result of their wilful and grossly negligent breach of the lease agreement.

Certainly, the plaintiff could have contacted the defendants once it foreclosed on the premises, as the defendants requested. The plaintiff, further, was required to so contact the defendants or be subject to any defense applicable to its successor in interest, House. See 52 C.J.S., Landlord Tenant § 547. The defendants argue that the plaintiff’s failure to notify the defendants that they acquired title to the premises, or that paragraph six payments were due, “throws into stark relief Plaintiff’s original strategy to use its new position to force Connecticut Water either to renegotiate its lease or to purchase the Property.” While the defendants presented no credible evidence to this effect, the court does not doubt that there was some deliberation in the plaintiff’s actions, given that the plaintiff acquired title to the premises in March 2005, but did not demand rent or even contact their known tenant until serving them with a notice to quit in June 2007. However, the fact remains that the defendants owed rent, but did not pay it or even make an effort to pay it. Neither party comes before the court with especially clean hands.[4]

c. The Plaintiff’s Injury Is Reparable
The final element for a claim of equitable non-forfeiture is that the landlord’s injury is reparable. There is no dispute that the landlord’s injury in this case consists wholly of approximately $60,000 in rent due but unpaid. (Def. Ex. H I.) The defendants have made clear their willingness to pay this amount. The plaintiff’s injury is thus reparable, although the defendants’ claim cannot succeed because it does not satisfy the first two elements of claim for equitable non-forfeiture.

d. The Defendants’ Failure to Pay Rent Was Not in a Good Faith Effort to Comply With the Lease, or in a Good Faith Dispute over the Meaning of the Lease
CT Page 6773 Lastly, the defendants argue that they had a good faith intent to comply with the lease and had a good faith dispute over the meaning of the lease. It was their position that it was the plaintiff’s responsibility to notify them if rental payments, rather than credits, were desired, as reflected in their April 15, 2004 letter to the plaintiff. They also argue that it was the plaintiff’s responsibility to notify them of the “triggering” of paragraph six. As noted above, this view is inconsistent with the plain language of the lease agreement, which calls for neither credits under any circumstances nor any notice by either party as to when paragraph six applies. The defendants had clear evidence that House underwent a substantial change in operations, implicating the formula in paragraph six, but did not make any rental payments to anyone. Thus, the defendants’ actions do not constitute a good faith effort to comply with the lease, nor do they reflect a good faith dispute over the meaning of the lease, as the suggested interpretation is not plausible given the express terms of the lease. Thus, relief under equitable non-forfeiture is inappropriate.

2. The Defendants’ Equitable Estoppel Claim Fails
The defendants next argue that they are entitled to remain in possession of the premises pursuant to the lease agreement under the doctrine of equitable estoppel. “There are two essential elements to an estoppel — the party must do or say something that 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 some act to his injury which he otherwise would not have done.” (Internal quotation marks omitted.) Fadner v. Commissioner of Revenue Services, 281 Conn. 719, 726, 917 A.2d 540 (2007). “[S]ilence will not operate as [an] estoppel absent a duty to speak.” (Internal quotations marks omitted.)Celentano v. Oaks Condominium Ass’n., 265 Conn. 579, 615, 830 A.2d 164
(2003).

The defendants reassert their position that it was the plaintiff’s responsibility to inform them of a change in operations triggering lease payments in lieu of credits. As noted above, this position is based on a misinterpretation of the plain language of the agreement. There is no provision for credits to be paid to the landlord in the operative version of the lease agreement and no provision for the landlord to notify the defendants when rental payments became due under paragraph six. The defendants had notice that there was a substantial change in House’s operations, triggering the requirements of paragraph six. The plaintiff argues only that there is no evidence to suggest that the defendants relied upon any of the plaintiff’s representations, or that CT Page 6774 the defendants changed a position in reliance on such a representation. As discussed below, the established facts do not support either element of the defendants’ claim for equitable estoppel relief.

The plaintiff contacted the defendants to negotiate a sale of the premises, although the plaintiff made it clear it did not, at that time, possess title. The final communication from the defendants requested that the plaintiff contact the defendants when it acquired title and if payments rather than credits were desired. The defendants argue that the plaintiff’s failure to provide notice of a paragraph six “trigger” induced Connecticut Water to believe that it had no obligation to make cash payments, and that “[b]ecause Plaintiff induced Connecticut Water to rely on its failure to give notice of Paragraph 6 trigger and because Connecticut Water relied on Plaintiff’s silence to its detriment, Plaintiff should be equitably estopped from being able to evict Connecticut Water.” Nevertheless, it was the defendants who asked the plaintiff to contact them when the plaintiff acquired title to the premises. Similarly, it was the defendants who asked the plaintiff to contact them regarding the desired form of rental payments. The plaintiff never represented to the defendants that it would notify them when it acquired title. Further, the plaintiff never represented that it was the plaintiff’s responsibility to inform the defendants when payments under paragraph six were due. Moreover, the lease agreement contains no provision requiring the plaintiff to notify the defendants of this. Thus, the defendants’ claim does not satisfy the first element of equitable estoppel, requiring the plaintiff to induce the defendants to believe certain facts and act upon them.

The defendants similarly fail to satisfy the second element of equitable estoppel, requiring a change in the defendants’ position that they would not have otherwise made. It is not clear what action, if any, the defendants took in reliance on any representations made by the plaintiff. The defendants took the position that credits, rather than rental payments, were owed to the landlord of the premises long before the plaintiff purchased House’s mortgage from Liberty. While required by the lease agreement, the defendants never paid rent in accordance with paragraph six to House or to the plaintiff. As discussed above, the plaintiff was not required to give notice to the defendants that paragraph six was “triggered”; the defendants nevertheless had clear evidence to that effect. Thus, the defendants fail to satisfy either requirement of equitable estoppel, that the other party induced them to believe certain facts and act on them, or that the defendants actually changed their position in reliance on those representations in a way that they would not have done otherwise. Therefore, the defendants’ claim for equitable estoppel relief fails. CT Page 6775

3. Laches
The defendants’ final equitable defense asserts that they are entitled to remain in possession of the premises based upon the doctrine of laches. “Laches occurs when neglect or omission to assert a right taken in conjunction with lapse of time and other circumstances, causes prejudice to an adverse party so as to operate as a bar to relief in equity . . . Laches consists of two elements. First, there must have been a delay that was inexcusable, and, second, that delay must have prejudiced the defendant . . . The mere lapse of time does not constitute laches.” (Citations omitted; internal quotation marks omitted.) Traggis v. Shawmut Bank of Connecticut, N.A., 72 Conn.App. 251, 262, 805 A.2d 105 (2002).

Here, the defendants argue that “[t]he Plaintiff should be estopped from evicting Connecticut Water because its delay in either providing information necessary to allow Connecticut Water to apply lease credits or providing notice of a Paragraph 6 trigger has caused Connecticut Water’s position to change for the worse.” As noted above, the plaintiff was required to do neither. The defendants also argue that the “[p]laintiff’s delay in enforcing its rights under the lease was both inexcusable and prejudicial to Connecticut Water.” However, the defendants have presented no credible evidence demonstrating this. The plaintiff acquired title to the premises on March 30, 2005, and served the defendants with a notice to quit on June 4, 2007, a total period of twenty-six months. This is not an unreasonable, inexcusable delay. The mere lapse of time does not constitute laches. Id. Similarly, the defendants have not shown what prejudice they suffered as a result of the plaintiff’s alleged unreasonable delay. The plaintiffs did not pay rent beginning in 2004 when House discontinued its water use, when House was still the owner of the premises. The defendants continued their nonpayment through receipt of the plaintiff’s notice to quit. Accordingly, the defendants are not entitle to equitable relief under the doctrine of laches. See Traggis v. Shawmut Bank of Connecticut, N.A., supra, 72 Conn.App. 262, 805 A.2d 105 (2002) (three years not unreasonable delay for purpose of laches); Kurzatkowski v. Kurzatkowski, 142 Conn. 680, 685, 116 A.2d 906 (1955) (twenty-five-year delay not unreasonable delay for purpose of laches absent prejudice).

IV CONCLUSION
The plaintiff has sustained its burden of proof on its claim that the CT Page 6776 defendants breached the lease agreement by failing to pay rent. The defendants have not sustained their burden of proof on their special defenses. Accordingly judgment for the immediate possession of the premises is ordered in favor of the plaintiff.

SO ORDERED.

[1] Our Supreme Court, “on the basis of . . . clear statements of legislative purpose, [found] that the provision in [General Statutes] § 49-22(a) excepting transferees or lienors was not intended to apply to tenants.” Tappin v. Homecomings Financial Network, Inc., 265 Conn. 741, 758, 830 A.2d 711 (2003).
[2] General Statutes § 47a-23(a)(3) provides that “[w]hen the owner or lessor . . . desires to obtain possession or occupancy of any land or building, any apartment in any building, any dwelling unit, any trailer, or any land upon which a trailer is used or stands, and . . . (3) when one originally had the right or privilege to occupy such premises but such right or privilege has terminated . . . such owner or lessor . . . shall give notice to each lessee or occupant to quit possession or occupancy of such land, building, apartment or dwelling unit, at least three days before the termination of the rental agreement or lease, if any, or before the time specified in the notice for the lessee or occupant to quit possession or occupancy.”
[3] In the present matter, the defendants breached the lease agreement in 2004 by failing to tender rental payments for water it extracted from the premises and sold to its customers. The defendants might have successfully argued that House is estopped from demanding cash payments because of an apparent mutually accepted course of dealing where Unionville Water applied credits, rather than paying rent due in cash, with House’s consent. However, this position is not valid against the plaintiff once it acquired title to the premises, where there was zero water usage and no course of dealing involving credits. Rather, the language of the lease agreement controlled, and required cash payments.
[4] “The doctrine of unclean hands expresses the principle that where a [complainant] seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue . . . For a complainant to show that he is entitled to the benefit of equity he must establish that he comes into court with clean hands . . . The clean hands doctrine is applied not for the protection of the parties but for the protection of the court . . It is applied . . . for the advancement of right and justice . . .” (Internal quotation marks CT Page 6777 omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 407, 867 A.2d 841 (2005).

CT Page 6778

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