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THE ACCESS AGENCY, INC. v. SECOND CONSOLIDATED BLIMPIE CONNECTICUT

REALTY, INC. ET AL.

(AC 38178)

Lavine, Keller and Beach, Js.

Argued January 5—officially released June 27, 2017

(Appeal from Superior Court, judicial district of

Windham, A. Santos, J.)

Lloyd L. Langhammer, for the appellant (plaintiff).

Richard S. Cody, with whom, on the brief, was Jon

B. Chase, for the appellee (defendant Richard Tarascio, Jr.).
Opinion

BEACH, J. The plaintiff, The Access Agency, Inc.,

appeals from the judgment of the trial court rendered

in favor of the defendant,1 Richard Tarascio, Jr. The

plaintiff claims the court erred in (1) finding that a

guaranty signed in connection with an expired lease

did not obligate the guarantor under a new lease and

(2) using an exhibit for purposes beyond the limited

purpose for which it was introduced. We affirm the

judgment of the trial court.

Pursuant to a lease agreement executed in August,

2000, the plaintiff leased premises at 1325 Main Street in

Willimantic (premises) to Second Consolidated Blimpie

Connecticut Realty,Inc.,(Consolidated Blimpie)for use

as a sandwich shop (2000 lease agreement). The parties

introduced into evidence several documents which

together define the business relationships among the

several entities. The seminal document is the lease

agreement between the plaintiff landlord and Consolidated Blimpie, as tenant. The lease created a tenancy

of five years, from August 1, 2000 until July 31, 2005.

The lease granted toConsolidatedBlimpie three options

to renew the lease for three additional five year periods.

The lease expressly incorporated a second document,

entitled ‘‘Rider to Lease’’ (rider). The lease was executed in August, 2000, by representatives of the plaintiff

and of Consolidated Blimpie.

The rider specifically contemplated the use of the

premises as a Blimpie’s franchise, and provided for the

subletting of the premises to a franchisee of Blimpie

International, Inc. The subtenant was required,

according to the rider, to execute a personal guaranty.

In the event that the ‘‘store’’ was transferred to another

subtenant and the new subtenant signed a personal

guaranty, the ‘‘prior subtenant shall be released from

its guaranty.’’ The rider also provided that Consolidated

Blimpie was entitled to assign the lease, and paragraph

7 (b) provided that an assignment or sublease would

not serve to extinguish the liability of the assignor or

sublessor.

The rider specifically contemplated that Consolidated Blimpie did not have assets other than the lease,

but was created for the purpose of negotiating and

signing the lease. The rider provided that the plaintiff

could not seek damages from any party other than the

tenant ‘‘and/or, if appropriate, the sublessee.’’ No stockholder or member of a limited liability company,

expressly including Blimpie International, Inc., could

be held liable for any obligation of the tenant. The rider

further provided that Consolidated Blimpie would be

subletting the premises to a Blimpie’s franchisee, and,

in the event of any default on the part of the sublessee,

the plaintiff agreed to offer the tenant a new lease, so

that Consolidated Blimpie could sublet the premises to
another Blimpie franchisee.

The structure of the arrangement can be gleaned

from the rider and the lease. The tenant, Consolidated

Blimpie, was acting in the interest of Blimpie International, the franchisor. Consolidated Blimpie effectively

insulated itself from liability by having no assets other

than the lease and by requiring the plaintiff to agree

that no stockholders or members, including Blimpie

International, Inc., could be held liable in damages.

Consolidated Blimpie could freely sublet the premises

to Blimpie franchisees, who were to pay rent directly

to the plaintiff and were liable to the plaintiff in the

event of default. In essence, the tenant, acting in the

interest of the franchisor, decided who, as a Blimpie

franchisee, would be in possession of the premises and

who would serve to guarantee Consolidated Blimpie’s

obligations to the plaintiff.

The first relevant guaranty was executed by the

defendant at approximately the same time as the first

lease and rider were executed. The guaranty referenced

the lease between the plaintiff and Consolidated Blimpie. The defendant generally guaranteed payment for

liabilities incurred by Consolidated Blimpie under ‘‘the

lease.’’ The guaranty provided that the defendant’s

potential liability would ‘‘remain . . . payable even

though the demised term or any renewal or extension

thereof shall have expired,’’ and an assignment of the

lease or any subletting was not to release the defendant

from liability as guarantor.

The first lease was renewed in 2005, for a five year

period. In 2007, KRES-CT, LLC, (KRES-CT), became

the successor, by merger, to Consolidated Blimpie. The

renewed lease lapsed on July 31, 2010. A series of events

took place at the end of 2010: the prior franchisee,

Tri-Star Blimpie I, LLC, which was controlled by the

defendant, sold its franchise, equipment and inventory

to Marshall Gebhardt, who in turn entered into a new

guaranty agreement with the plaintiff. The Gebhardt

guaranty is identical in materialrespects to the guaranty

previously executed by the defendant, except that it

guarantees the obligations of ‘‘KRES-CT, LLC, successor by merger to [Consolidated Blimpie].’’ At approximately the same time, a ‘‘Renewal of Lease Agreement’’

was entered into by the plaintiff and KRES-CT. The

renewal recited the prior merger of Consolidated Blimpie and KRES-CT, and generally incorporated the provisions of the prior leases. KRES-CT represented that

it was the successor to all duties and obligations of

the lessee.2

Finally, by letter dated January 6, 2011, the plaintiff

was informed that Gebhardt had bought the franchise

and that KRES-CT would remain liable as tenant.3 As

discussed previously, Gebhardt guaranteed KRESCT’s obligations.
On August 31, 2011, the plaintiff notified Gebhardt

that it had not received rent payments for July and

August, 2011. KRES-CT did not make rental payments

after October 1, 2012. There was no claim that the

defendant had not paid rent while he or his business

entity was the franchisee, or that rents were in arrears

when he sold his business to Gebhardt.

In 2014, the plaintiff commenced an action against

the defendant and others for failure to pay rent under

the terms of the lease agreement.4 The court found that

the 2010 agreement was a new lease agreement between

the plaintiff and KRES-CT, in which KRES-CT agreed

to be bound by the terms ofthe original lease agreement.

The court found that the defendant’s ‘‘obligations under

the 2000 lease ceased when the plaintiff and KRES-CT

signed the ‘Renewal of the Lease.’ Under the new lease,

the plaintiff sought to protect itself in case of default

by KRES-CT of its obligations, and thus required Gebhardt to guarantee the new lease obligations. . . . Gebhardt was the sole guarantor of the new lease at the

time that KRES-CT breached the lease and failed to

pay rent. The damages suffered by the plaintiff as a

result of the breach are attributable to KRES-CT and

Gebhardt as guarantor of the lease.’’5

(Emphasis added.)

The court rendered judgment in favor of the plaintiff

as against KRES-CT and Gebhardt, and awarded the

plaintiff damages in the amount of $57,368.18 against

KRES-CT and Gebhardt, which included, inter alia,

$43,940 in unpaid rent, as well as $8506 in attorney’s

fees, additional postjudgment attorney’s fees in the

amount of $1850, and $3072.18 in interest on the plaintiff’s offer of compromise. The court found the defendant not liable and rendered judgment in his favor. This

appeal followed.

I

The plaintiff first claims that the court erred in finding

that Gebhardt was the sole guarantor of the 2010 lease

agreement. We disagree.

‘‘A guaranty is merely a species of contract. . . . [A]

guarantee is a promise to answer for the debt, default

or miscarriage of another. . . . The contract of guarantee is no doubt an agreement separate and distinct

from the contract between the [lessor] and the [lessee].’’

(Citations omitted; internal quotation marks omitted.)

JSA Finanical Corp. v. Quality Kitchen Corp. of Delaware, 113 Conn. App. 52, 57, 964 A.2d 584 (2009). ‘‘The

interpretation of continuing guaranties, as of other contracts, is principally a question of the intention of the

contracting parties, a question of fact to be determined

by the trier of facts. . . . Even a continuing guaranty

that is, in terms, unlimited as to duration, imposes liability upon a guarantor only for such a period of time as

is reasonable in light of all of the circumstances of the

particular case. . . . The finding of the trial court with
respect to the intent of the contracting parties regarding

the scope of their contractual commitment is, like any

other finding of fact, subject only to limited review on

appeal. . . . Our role is limited to determining whether

the decision of the trier of facts was clearly erroneous

in light of the evidence and the pleadings in the whole

record.’’ (Citations omitted; internal quotation marks

omitted.) Monroe Ready Mix Concrete, Inc. v. Westcor

Development Corp., 183 Conn. 348, 351–52, 439 A.2d

362 (1981). ‘‘In determining the parties’ intentions, the

trial court was entitled to rely on, inter alia, the language

of the guaranty.’’ Connecticut National Bank v. Foley,

18 Conn. App. 667, 670, 560 A.2d 475 (1989).

The plaintiff argues that the provisions of the 2000

lease agreementremained in effect, such that the defendant remained a guarantor, along with Gebhardt, of

KRES-CT’s obligations under the 2010 agreement. It

contends that the following language of the guaranty

signed by the defendant is clear regarding the continuing nature of the guaranty: ‘‘This Guaranty shall be an

absolute and unconditional guaranty and shall remain

in full force and effect as to the [defendant] during

the demised term of said Lease, and any renewal or

extension thereof, and thereafter so long as any Liabilities remain and payable even though the demised term

or any renewal or extension thereof shall have expired.’’

The plaintiff further argues that the ‘‘renewal

agreement’’ did not create a new lease but rather

extended the original lease agreement. In support of its

argument, the plaintiffrefers to the heading ‘‘Renewal of

Lease Agreement’’ placed on the renewal agreement

and to the clauses in the renewal agreement that recite

that ‘‘KRES-CT assumed all duties and obligations of

the lessee’’ and that ‘‘KRES-CT wishes to exercise its

option to renew the Lease on the terms and conditions

as contained therein . . . .’’ We disagree and conclude

that the court’s findings were not clearly erroneous.

The 2000 lease agreement provided that the term of

the lease commenced on August 1, 2000, and ended on

July 31, 2005. The lease agreement provided for three

options to renew for a period of five years per renewal.

In 2005, Consolidated Blimpie exercised its first option

to renew. It is undisputed that the defendant guaranteed

the 2000 lease agreement and that his guaranty also

applied to the 2005 renewal. Further, the 2007 merger

of Consolidated Blimpie into KRES-CT is not claimed

to have affected the guaranty, because of the language

of the documents discussed previously.

The court found factually, however, that neither Consolidated Blimpie nor KRES-CT, the successor to Consolidated Blimpie, renewed the 2000 lease in 2010;

rather, the 2000 lease expired.6 The 2010 agreement,

signed by the plaintiff, stated that the 2000 lease

agreement ‘‘as previously renewed, expired as of July

31, 2010.’’7 After the lease expired, the defendant’s lim-
ited liability company sold the Blimpie’s franchise to

Gebhardt. Peter Debiasi, the president of the plaintiff,

testified that in 2010 Gebhardt bought the franchise,

and, as such, the plaintiff began dealing with Gebhardt

regarding the franchise. KRES-CT entered into the 2010

lease agreement with the plaintiff on December 20,

2010. Gebhardt signed a guaranty for obligations arising

under the 2010 agreement.

The guaranty signed by the defendant provided that,

under the lease from the plaintiff to Consolidated Blimpie, the defendant would ‘‘absolutely and unconditionally guarantee to [the plaintiff], its successors and

assigns the full and prompt payment when due of all

rents, charges and additional sums coming due under

the Lease, together with the performance of all covenants and agreements of [Consolidated Blimpie] therein

contained and together with the full and prompt payment of all damages that may arise or be incurred by [the

plaintiff] in consequence of [Consolidated Blimpie’s]

failure to perform such covenants and agreements

. . . .’’ There is no language in the defendant’s guaranty

that makes him liable forthe obligations of a new tenant

after the expiration of the 2000 lease agreement.8

The court’s finding that the defendant did not guarantee obligations under the 2010 lease is reinforced by

the reality of the business transaction, as outlined in

the documents discussed at some length in the factual

history section of this opinion. The documents executed

by the parties in 2000 contemplated that the tenant, in

effect the franchisor, had the ability freely to sublease

the premises to serial franchisees. The rider, signed by

the plaintiff, plainly stated that a sublessee was to be

released from his obligation as guarantor when a successor sublessee was substituted on the premises.9

In

sum, the court’s findings that the 2000 lease agreement

had expired and that Gebhardt was the sole guarantor

of the 2010 agreement are supported by the record and,

as such, are not clearly erroneous.

II

The plaintiff next claims that the court committed

reversible error when it used an exhibit for substantive

purposes rather than only for the limited purpose for

which it had been admitted. We conclude that there

was error, but that it was harmless.

At trial, the court permitted the defendant to introduce a letter dated January 6, 2011, for the limited

purpose of impeaching Debiasi. The letter notified the

plaintiff that there would be a new Blimpie’s franchise

on the premises. In reaching its conclusion that Gehardt

was the sole guarantor of the 2010 agreement, the court

noted that ‘‘[t]he January 6, 2011 letter to the plaintiff

reminds the plaintiff that Gebhardt is the new franchisee and that KRES-CT is the new tenant.’’

‘‘Evidence which is offered and admitted for a limited
purpose only, and the facts found from such evidence,

cannot be used for another and totally different purpose.’’ O’Hara v. Hartford Oil Heating Co., 106 Conn.

468, 473, 138 A. 438 (1927). It was improper for the

court to use the letter for substantive purposes when it

was admitted forthe limited purpose of testing Debiasi’s

credibility. Such error, however, is subject to a harmless

error analysis. See Testone v. C. R. Gibson Co., 114

Conn. App. 210, 218–19, 969 A.2d 179, cert. denied, 292

Conn. 914, 973 A.2d 663 (2009). Other evidence that

Gebhardt was operating a Blimpie’s franchise on the

premises was before the court. The 2010 agreement

stated that the 2000 lease had expired, and the bill of

sale indicated that the defendant sold the Blimpie’s

franchise to Gebhardt. The letter was cumulative of

other evidence, including uncontested documents, and

was most unlikely to have affected the result. See Federal Deposit Ins. Corp. v. Carabetta, 55 Conn. App.

384, 389, 739 A.2d 311 (whether improperly admitted

evidence was cumulative is factor in harmless error

analysis), cert. denied, 251 Conn. 928, 742 A.2d 362

(1999).

The judgment is affirmed.

In this opinion the other judges concurred.

1 The complaint was also brought against Second Consolidated Blimpie

Connecticut Realty, Inc., KRES-CT, LLC, and Marshall Gebhardt. The court

clerk granted the plaintiff’s Practice Book § 17-20 motion for default for

failure to appear as to those parties. Tarascio only filed a brief in response

to the plaintiff’s appeal. We will refer to Tarascio only as the defendant.

2 Exhibit 3 is an unsigned copy of the ‘‘Renewal of Lease Agreement’’; it

contains a signature line for a representative of KRES-CT. The parties appear

to have deemed Exhibit 3 to be authentic.

3 The plaintiff claims that this letter was improperly used for substantive

purposes by the court. See part II of this opinion.

4 See footnote 1 of this opinion.

5 The defendant filed a ‘‘cross complaint’’ on which the court found in

favor of the plaintiff and Gebhardt. The judgment on the ‘‘cross complaint’’

is not an issue on appeal.

6 Although the title of the 2010 agreement is ‘‘Renewal of Lease

Agreement,’’ it does not necessarily follow that the 2010 agreement was in

fact a renewal of the 2000 lease. There is ample evidence in the record to

support the court’s conclusion that the 2010 agreement was a new lease

rather than a renewal.

7 Additionally, the rider to the 2000 lease provides in relevant part that

‘‘[w]ithin sixty (60) days prior to the expiration of the time within which

[Consolidated Blimpie] is required to give notice of the exercise of and

option to extend the term of this Lease, [the plaintiff] shall give written

notice to [Consolidated Blimpie] advising [Consolidated Blimpie] of the time

within which its right to serve the notice expires.’’ There was no evidence

presented that the plaintiff sent such notice.

8 Subsection 7 (d) of the rider to the 2000 lease provides that ‘‘[t]he

subtenant shall execute a personal guaranty in the form attached hereto.

Upon transfer of the store to another subtenant, provided the new subtenant

executes a personal guaranty, in the same form attached hereto, the prior

subtenant shall be released from its guaranty.’’ The plaintiff argues that the

defendant did not allege release as a special defense. In his special defenses,

however, the defendant claimed that ‘‘Gebhardt is the sole guarantor of the

Lease alleged to have been breached.’’

9 We note that, under the scheme, the prior sublessee would nonetheless

be responsible for obligations incurred while he was sublessee. It makes

economic sense for a franchisee to be liable for his own debts, as the

franchisee paid rent directly to the landlord, but not for those of a successor

who might come to occupy the same premises.