19 PERRY STREET, LLC v. THE UNIONVILLE WATER COMPANY et al., SC 18344

Housing Session at Hartford

 Summary Process; Whether Defendants Breached Lease; Whether Lease Should have been Reinstated Pursuant to Doctrine of Equitable Nonforfeiture.  In 1975, the defendant Unionville Water Company entered into a ninety-nine year lease with the plaintiff's predecessor in interest, Chas. W. House & Sons, Inc. (House), to place wells on and extract water from a portion of House's premises in Farmington.  The  monthly rent was equal to a percentage of House's annual water cost incurred in connection with its manufacturing business.  A separate formula for calculating the rent was contained in paragraph six of the lease, which was to be triggered if House changed its operations so as to substantially reduce its annual water consumption.  In 1978, a provision was added to the lease that required Unionville Water to pay rent in the form of water usage credits as opposed to cash payments.  Although that provision was eliminated in 1990, Unionville Water continued to pay rent by crediting House's water bills until House ceased operating in 2004.  Water invoices sent to House from the defendant Connecticut Water Company, which had acquired Unionville Water, were subsequently returned as undeliverable.  Not long thereafter, the plaintiff, which had obtained a mortgage on House's premises, foreclosed, and title vested in the plaintiff.  The defendants, continued to draw water from the wells and did not pay any rent.  In April, 2007, the plaintiff served notices to quit on the defendants, alleging, as alternative theories, nonpayment of rent, "termination of a right or privilege to occupy the premises" and "no right or privilege to occupy the premises."  The defendants asserted special defenses, including equitable nonforfeiture.  Following a trial, the court rendered judgment for the plaintiff.  The court found that the lease agreement was enforceable.  It then found that after House discontinued its water use in 2004, paragraph six of the lease was triggered, and rent became due under that provision in the form of cash payments.  It declined to construe the contract, as the defendants argued, to allow for payments in the form of credits based on the past practices of the parties.  The court next determined that the defendants breached the lease, rejecting their claims that they had satisfied their obligation to pay rent by "stockpiling" the estimated rent due while periodically searching the land records for a change in ownership.  It found that their conduct fell short of actually tendering the rent due, in any form, to any party.  Finally, the court rejected the defendants' special defenses, finding, among other things, that the doctrine of equitable nonforfeiture did not apply because the defendants' wilful failure to pay rent and grossly negligent conduct had jeopardized their ability to provide adequate levels of water to their consumers.  The defendants now appeal.