Apted-Hulling, Inc. et al. vs. L&S Properties, Ltd and John Lueders; February, 2006

$255,339.57 in monetary damages and immediate possession of the property; Lease ordered rescinded and declared to be commercially impracticable.

Plaintiff Apted-Hulling, Inc. owns the real estate upon which the Cheshire Inn Hotel (known as the "Lodge") and Cheshire Inn Bar & Restaurant (known as the "Inn") operate. Plaintiff Cheshire Inn Motor Hotel, Inc. is the business entity that actually operates the Lodge. In 1989, Plaintiff leased the Inn to Defendant John Lueders, who assigned it to his company, co-defendant L&S Properties, Ltd., which operates the Inn's bar, banquet and restaurant businesses. Pursuant to the parties lease, Defendants were obligated to "provide continuous room service" to Lodge guests, and to maintain the same hours of operation that were in place when the lease was signed. The lease also obligated Defendants to pay all utility bills, including the sewer bill to MSD.

In the summer of 2004, Plaintiffs filed a suit against Defendants for breach of contract and unlawful detainer. In January 2005, the Petition was amended to include claims for Declaratory Judgment and Rescission. In sum, Plaintiffs alleged that Defendants had breached the agreement by, among other things, failing to provide continuous room service, failing to maintain the same hours of operation and by failing to pay the MSD bill. Plaintiffs alleged that such failures caused harm to their reputation, caused them to incur lost profits and suffer other financial damages. Lastly, Plaintiff asked the Court to rescind the lease agreement and/or declare the lease to be commercially impractical to perform, and order the Defendants to immediately vacate the property.

Defendants denied the allegations, claiming that they did not breach any term of the lease agreement, and that even if they did, the corresponding damage was so insignificant that it did not justify the drastic relief requested by Plaintiff, such as rescission or the issuance of a declaratory judgment.

At trial, Plaintiffs introduced evidence to demonstrate that the defendants business had changed significantly. It no longer was a restaurant doing over 2.5 million in sales as it had in 1989; instead, restaurant sales decreased to just a third of former sales, and liquor sales increased by 40% or more - due mostly to a late night liquor license Defendants obtained in 1995. Plaintiff argued that since obtaining that license, Defendants no longer made any serious attempt to provide a first class breakfast to its Lodge guests, or to provide its guests timely room service or food service. Plaintiff argued that as a result in the loss of these services over the years, and the decrease in banquet sales and service levels, that single room rentals at the Lodge decreased significantly and caused it to lose $244,236.02 in lost profits over the last two years alone. Plaintiffs also claimed that Defendants failure to pay the MSD bills timely resulted in a lien for $11,103.55 being placed upon its real estate.

Defendants countered by claiming that the vast majority of its room service and food services were excellent, and that problems of the sort Plaintiffs complained of were exaggerated in significance and frequency. Thus, Defendants maintained they had not breached the lease or caused any damage to Plaintiffs reputation or finances. And finally, Defendants argued that the Plaintiffs allegations were not consistent with the fact that it invested over $600,000 in the Property, and that removing them from the property was not justified or warranted given this history and the evidence submitted.

After four days of trial, the Court entered a judgment awarding Plaintiffs: (a) a monetary judgment against Defendants, jointly and severally, for $255,339.57 in lost profits and MSD liens; (b) rescission of the lease agreement; (c) a declaration that the lease is commercially impractible to defendants; and (d) immediate possession of the Cheshire Inn.