Case Notes

What the tenant, in effect, was asking the court for was time to allow it to walk away from its obligations to the landlord, substitute itself for the bank and then foreclose on the debtor/landlord that it had forced into foreclosure. The court, finding this result untenable, denied the tenant's request for stay of eviction, and declared it would hear no further petitions for a stay unless and until the tenant gave the receiver a check for the nearly $200,000 in back rent due.

According to the law firm representing the plaintiff, Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., the tenant's actions gained it the judge's “Chutzpah of the Year Award.”

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Statutory Theft Decision Stands

In Fernwood Realty, LLC v. Aerocision, LLC, 166 Conn. App. 345; 2016 Conn. App. LEXIS 270 (Appellate Court of Connecticut 6/21/16), the plaintiff lessor, who owns a commercial manufacturing building, sought damages from the defendant lessee for default on the lease and for statutory theft because the tenant took certain electrical components from the leased property upon vacating it. The defendant lessee counterclaimed for, among other things, constructive eviction, claiming that the landlord had threatened its employees and that there were water issues.

The defendant ' who took over the lease from the predecessor ' had been manufacturing airplane engine parts in the subject building. That building was a replacement facility built by the landlord after the original leased property burned down during the predecessor tenant's occupancy.

The tenant/defendant notified the landlord that it would vacate prior to the lease's end date because of alleged water problems and threats to its employees. The landlord then notified the lessee in writing that it was not to remove the electrical components from the property; the tenant responded by changing the locks and removing the electrical components.

The trial court found that the electrical components the tenant removed were not its property, and that the tenant did not have a good-faith belief that the fixtures actually were its property, and so found the tenant guilty of statutory theft.

The appeals court found no reason to overturn this decision, noting that there was solid evidence that the landlord owned the electrical components when he installed them in the new facility that replaced the one destroyed by fire. For support of this conclusion, it looked to ATC Partnership v. Town of Windham , 268 Conn. 463, a case in which Connecticut's Supreme Court had to decide whether certain fixtures had been “severed from the underlying realty and thereby revert[ed] back to the status of personalty.” There, the Supreme Court explained: “With regard to the potential progression of property from fixture to personalty, the general rule is that such severance may be either actual, in the sense of physical separation from the realty and removal from the land, or constructive, as in a situation in which a party objectively manifests its consideration of property as personalty ' or in which parties agree as between themselves to consider a fixture as personalty.”

Here, the court found that, in 2005, the predecessor tenant sold its personal property to the defendant. In that agreement the personal property that was to change hands was listed, and the electrical distribution system and the electrical components in issue in this case were not included. Thus, at least as between the tenant and the prior tenant, there was no understanding that the electrical components belonged to the predecessor tenant and were changing hands through that contract. Their installation constituted improvements for the permanent benefit of the facility, the court said.

The tenant showed its true colors by romoving the fixtures and changing the locks after being advised in writing that the landlord claimed ownership of them. The appellate court concluded that the tenant intended to deprive the landlord of its property in order to make it more expensive and difficult for the landlord to compete against the tenant.

As to the tenant's claim of constructive eviction, the appeals court agreed with the trial court that the tenant failed to offer adequate proof. First, the two employees allegedly threatened by the landlord did not testify. Second, former employees of the tenant did testify that the water problems in the facility were insignificant. Third, testimony of an electrician hired by the tenant indicated that the tenant intended to vacate the leased premises six months prior to the time that it abandoned the leased property and moved to a new facility. And, finally, the tenant had signed a lease for the other facility prior to vacating the subject premises.

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