Owner Wrongfully Withheld Tenant's Security Deposit

What Happened: After 30 years of running a Dunkin’ Donuts out of the space, a tenant decided not to renew the lease. The tenant left the space broom-clean and removed all the counters, shelving, display cases, and doughnut shop-related furniture. The owner claimed the premises weren’t “rentable,” made long-term renovations, and withheld the $10,000 security deposit to pay for it. The tenant sued.

Decision: The Connecticut court ruled that the owner had not only violated the lease but also acted in bad faith under the state’s consumer protection law.

Reasoning: The lease didn’t bar the tenant from removing the shelves and other “trade fixtures.” The owner’s demand that the tenant leave the space as a “vanilla box” with walls prepared for painting, floors prepared down to the subfloor, and ceilings uniform and useable with correct lighting, was unreasonable since all the lease required was that the space be “in good order and condition.” While it showed quite a bit of wear and tear, something to be expected after 30 years, the space was in good order and condition and could have been made rentable with a few quick and relatively inexpensive repairs. Keeping the space off the market for two years while spending $100,000 in renovations to make it “vanilla box” was the owner’s decision. Disguising its plan and trying to use the security deposit to pay for it was an act of bad faith warranting another $10,000 in damages. Adding icing to the doughnut, the owner also had to pay the tenant’s attorney fees. 

• E.W. Batista Family Ltd. P’ship v. 74 Route 37, LLC: 2019 Conn. Super. LEXIS 1543