Court Opinion

ID: 4178893
Source: CourtListenerOpinion
Date Created: 2017-06-20 13:09:06.660522+00
Date Added: 2024-06-11T07:46:33.739023
License: Public Domain

******************************************************
  The ‘‘officially released’’ date that appears near the
beginning of each opinion is the date the opinion will
be published in the Connecticut Law Journal or the
date it was released as a slip opinion. The operative
date for the beginning of all time periods for filing
postopinion motions and petitions for certification is
the ‘‘officially released’’ date appearing in the opinion.
In no event will any such motions be accepted before
the ‘‘officially released’’ date.
  All opinions are subject to modification and technical
correction prior to official publication in the Connecti-
cut Reports and Connecticut Appellate Reports. In the
event of discrepancies between the electronic version
of an opinion and the print version appearing in the
Connecticut Law Journal and subsequently in the Con-
necticut Reports or Connecticut Appellate Reports, the
latest print version is to be considered authoritative.
  The syllabus and procedural history accompanying
the opinion as it appears on the Commission on Official
Legal Publications Electronic Bulletin Board Service
and in the Connecticut Law Journal and bound volumes
of official reports are copyrighted by the Secretary of
the State, State of Connecticut, and may not be repro-
duced and distributed without the express written per-
mission of the Commission on Official Legal
Publications, Judicial Branch, State of Connecticut.
******************************************************
  THE ACCESS AGENCY, INC. v. SECOND CON-
     SOLIDATED 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 Taras-
cio, 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 Consoli-
dated Blimpie, as tenant. The lease created a tenancy
of five years, from August 1, 2000 until July 31, 2005.
The lease granted to Consolidated Blimpie 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 exe-
cuted 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 Consoli-
dated 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 stock-
holder 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 Interna-
tional, 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 Blim-
pie. 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 material respects to the guaranty
previously executed by the defendant, except that it
guarantees the obligations of ‘‘KRES-CT, LLC, succes-
sor by merger to [Consolidated Blimpie].’’ At approxi-
mately 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 Blim-
pie and KRES-CT, and generally incorporated the provi-
sions 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 KRES-
CT’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 of the 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 Gebh-
ardt to guarantee the new lease obligations. . . . Gebh-
ardt 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 plain-
tiff’s offer of compromise. The court found the defen-
dant 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 guaran-
tee 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 Dela-
ware, 113 Conn. App. 52, 57, 964 A.2d 584 (2009). ‘‘The
interpretation of continuing guaranties, as of other con-
tracts, 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 liabil-
ity 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 agreement remained in effect, such that the defen-
dant 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 continu-
ing 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 Liabili-
ties 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 plaintiff refers 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 Con-
solidated Blimpie nor KRES-CT, the successor to Con-
solidated 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 Blim-
pie, the defendant would ‘‘absolutely and uncondition-
ally 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 cove-
nants and agreements of [Consolidated Blimpie] therein
contained and together with the full and prompt pay-
ment 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 for the obligations of a new tenant
after the expiration of the 2000 lease agreement.8
   The court’s finding that the defendant did not guaran-
tee 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 suc-
cessor 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 intro-
duce 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 franchi-
see 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 pur-
pose.’’ 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 for the 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 Fed-
eral 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.