Opinion
No. FST CV 10 6006869 S
June 24, 2011
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT #125 and CROSS-MOTION FOR SUMMARY JUDGMENT #128
On October 4, 2010, the plaintiff, Village Walk Condominium, Inc., commenced a foreclosure action against William E. Head ("Head"), alleging that Head owed $2,651.41 in common charges and assessments, in addition to interest, costs and attorneys fees, as of August 20, 2010. Pursuant to the plaintiff's declaration ("declaration") of condominium, Head was under a legal obligation to pay common charges and assessments on account of his ownership of unit 52 ("the property") at Village Walk Condominium in Wilton, according to the complaint. The complaint further alleges that Head did not comply with the plaintiff's requests to pay all charges due and that the plaintiff perfected a statutory lien against the property pursuant to General Statutes §§ 47-257 and 47-258.
The complaint lists five other defendants who allegedly have interests in the property that are subsequent to the plaintiff's common charge assessments pursuant to section 47-258. Of those five, only defendant Eastern Savings Bank, FSB ("Eastern") is implicated in these cross-motions for summary judgment. The complaint alleges that Eastern has a mortgage from Head in the principal amount of $299,000 recorded on April 7, 2006, and that the mortgage is subsequent in priority to six months of common-charge assessments Head owes to the plaintiff.
On December 13, 2010, Eastern filed its answer and special defense. In its answer, Eastern admitted that Head is the owner of the condominium and that the declaration was recorded and filed in the land records, but denied that the plaintiff has perfected a statutory lien pursuant to General Statutes §§ 47-257 and 47-258. In its special defense, Eastern argued that the plaintiff's claim that its common charges have priority over Eastern's mortgage is inconsistent with the terms of the declaration. On December 30, 2010, the plaintiff moved to strike the special defense. The court struck the special defense on February 14, 2011.
On February 25, 2011, Eastern filed an amended answer and special defense. The answer is substantially the same as the original filed in December 2010. The special defense states that pursuant to General Statutes § 47-77, the mortgage is not subsequent in priority to assessed common charges, and that pursuant to General Statutes § 47-216, the application of General Statutes § 47-258 cannot serve to invalidate existing provisions of condominium declarations.
On March 14, 2011, the plaintiff replied to Eastern's special defense, denying Eastern's characterization of priorities and denying that its own claim of priority invalidates the terms of the declaration. On the same day, the plaintiff moved for summary judgment. Attached to this motion are the following exhibits: (a) the certified copy of the results of a title search into the property, in addition to the Village Walk Condominium declaration of condominium and amendments thereto, all filed in the Wilton land records; (b) an affidavit of debt signed by Jennifer Feiman, the property manager at Imagineers, LLC, the plaintiff's managing agent; and (c) the affidavit of the plaintiff's counsel, Christopher K. Leonard. On May 6, 2011, Eastern filed a memorandum in opposition to the plaintiff's motion for summary judgment and cross-moved for summary judgment against the plaintiff. On May 13, 2011, the plaintiff replied to Eastern's objection to summary judgment. On May 16, 2011, the court heard oral argument in the plaintiff's motion for summary judgment. The plaintiff filed an objection to Eastern's cross motion on May 17, 2011, incorporating by reference its previous briefs filed in this matter. The parties have agreed to have Eastern's cross motion decided on the papers.
"Summary judgment shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Wilton Meadows Ltd. Partnership v. Coratolo, 299 Conn. 819, 823 (2011). "A material fact . . . [is] a fact which will make a difference in the result of the case." (Internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 757 (2006). "The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Internal quotation marks omitted.) Wilton Meadows Ltd. Partnership v. Coratolo, supra, 299 Conn. 823. "It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment]." (Internal quotation marks omitted.) Weiss v. Weiss, 297 Conn. 446, 471 (2010).
The evidence submitted by the parties establishes that the declaration was recorded in 1973 in the Wilton land records. (P's Exh. A, p. 13.) Article 9(1) of the declaration provides in relevant part: "Each unit owner . . . shall be liable for common expenses in the same percentage as the individual unit owner has in the undivided interest of the total common areas and facilities." (P's Exh. A, p. 9.) Article 22 provides as follows: "Conflicts. This declaration is set forth to comply with the requirements of the Unit Ownership Act of the State of Connecticut as provided for in the Connecticut General Statutes, Revision of 1958 as amended in 1963. In case of any conflict between this declaration and the provisions of the Unit Ownership Act, as the same now exists and as it may from time to time be amended, the provisions of said statute shall control." (P's Exh. A, pp. 12-13.) The declaration makes no mention of priority of liens.
The Unit Ownership Act was amended in 1976 into what is now known as the Condominium Act of 1976, General Statutes §§ 47-67 through 47-90(c). General Statutes § 47-77(a), which dates back to the 1963 act referenced in the declaration, provides in relevant part: "All sums assessed by the association of unit owners, but unpaid, for the share of the common expenses chargeable to any unit shall constitute a lien on such unit prior to all other liens, except only (1) tax liens on the unit in favor of any assessing authority and special district, including any state and federal tax liens, and (2) all sums unpaid on mortgages of record." In 1983, the legislature created a third statutory scheme to govern condominiums, the Common Interest Ownership Act (CIOA), General Statutes § 47-200 et seq., which applies to common interest communities created on or after January 1, 1984. General Statutes § 47-214. The CIOA also contains a section providing that several CIOA provisions, including section 47-258, "apply to all common interest communities created in this state before January 1, 1984; but those sections apply only with respect to events and circumstances occurring after January 1, 1984, and do not invalidate existing provisions of the declaration, bylaws or surveys or plans of those common interest communities." General Statutes § 47-216. Section 47-258(a) in turn provides in relevant part: "The association has a statutory lien on a unit for any assessment attributable to that unit or fines imposed against its unit owner." Furthermore, subsection (b) of section 47-258 provides that "[a] lien under this section is prior to all other liens and encumbrances on a unit" with certain exceptions. Unlike the priority scheme of section 47-77(a), subsection (b) of section 47-258 does not include sums unpaid on mortgages among the items senior in priority to an association lien.
The parties disagree over whether section 47-77 or section 47-258 applies to the plaintiff's statutory lien, and thus, whether this lien has priority over Eastern's interest in the property. The plaintiff argues that it is entitled to summary judgment because section 47-216 shows that the legislature intended to implement a uniform legal framework for assessment liens, section 47-258 effectively repeals conflicting language in section 47-77, and the application of section 47-258 does not result in the invalidation of any provision of the declaration. Eastern urges the court to grant summary judgment in its favor, arguing that it loaned funds to Head in reliance on the declaration, that the federal and state constitutions do not allow new laws to be retroactively applied to existing contracts, and that the language of the declaration prevents new statutory schemes such as the CIOA from being applied to the declaration.
Numerous Superior Court decisions have held that even though section 47-77 has not been repealed, it has been effectively superseded by section 47-258 due to the express provisions of section 47-216. See, e.g., Mountain View Condominium Assn. of Vernon, Conn., Inc. v. Rumford Associates, IV, Superior Court, judicial district of Tolland, Docket No. CV 94 55693 (March 4, 1997, Hammer, J.T.R.). Section 47-77 "almost certainly has been superseded and its lien provisions rendered nugatory by section 47-258." Id. (quoting D. Caron, Connecticut Foreclosures, and Attorney's Manual of Practice and Procedure, § 12.02 (2d Ed. 1989)); see also Countrywood Hills Condominium Assn., Inc. v. Crumb, Superior Court, judicial district of Waterbury, Docket No. 137828 (September 19, 1997, Kulawiz, J.) (same); Hayes House Condominium v. Galvez, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 89 0099447 (January 8, 1991, Katz, J.) ("(e)ven though Hayes House was created before 1984, the lien is only for events that occurred after 1984 and therefore, under General Statutes § 47-216, section 47-258 applies to the instant action").
"The legislature is presumed to have acted with the intent to create a consistent body of law. . . . If two statutes appear to be in conflict but can be construed as consistent with each other, then the court should give effect to both . . . [E]nactments by the General Assembly are presumed to repeal earlier inconsistent ones to the extent that they are in conflict . . . Because repeal by implication is generally disfavored, however, the principle applies only when the relevant statutes cannot stand together." (Internal quotation marks omitted.) Wilson v. Cohen, 222 Conn. 591, 598 (1992). The court rules that sections 47-77 and 47-216 are directly in conflict, and that section 47-216 was intended to repeal section 47-77 to the extent that the earlier statute is inconsistent with the later enactment.
Eastern, however, argues that the declaration's reference to "the provisions of the Unit Ownership Act, as the same now exists and as it may from time to time be amended" means that the declaration is only subject to amendments of the Unit Ownership Act itself and not to any separate subsequent legislation, such as the CIOA. The declaration of condominium is in the nature of a contract, and courts apply rules of contract construction to interpret provisions of declarations. Cantonbury Heights Condominium Assn., Inc. v. Local Land Development, LLC, 273 Conn. 724, 734 (2005); see also Harbour Pointe, LLC v. Harbour Landing Condominium Assn., Inc., 300 Conn. 254, 259 (2011) (deciding to apply contract interpretation principles to a condominium declaration). "The law favors a construction which will make a contract valid rather than invalid unless that construction is required by the terms of the agreement in the light of surrounding circumstances." Mozzochi v. Luchs, 35 Conn.Sup. 19, 23 (1977).
Interpreting the declaration in the method advanced by Eastern, such that the declaration could never be subject to any provisions of the CIOA, would make certain parts of the declaration subject to earlier condominium laws that have been repealed by implication through subsequent legislative enactments. Such an interpretation is disfavored by law. The intent of Article 22 of the declaration, titled "Conflicts," was to provide guidance on how to resolve uncontemplated conflicts between the declaration and legislation as Connecticut's condominium law changed and evolved. The drafters of the declaration evidently wished to avoid the need to amend the declaration with every change in condominium law. The reference to the Unit Ownership Act, the only condominium law in existence in Connecticut in 1973, cannot be interpreted in a way that binds the declaration to that act in perpetuity, especially when certain parts of the 1963 statutory scheme have been invalidated by the CIOA.
Furthermore, the declaration itself makes no mention or reference to the priority of liens. The sole reference to assessment liens is in section 11 of the declaration, subsection (c) of which provides that in the event that a unit owner defaults on paying common charges, "[t]he Board of Directors shall have the right and duty to recover such common charges together with interest thereon in an action to recover the same brought against the unit owner or by foreclosure of a lien on any unit under powers granted by the Unit Ownership Act as set forth in the Connecticut General Statutes, Revision of 1958, as amended in 1963." (P's Exh. A, pp. 31-32.) Subsection 11(d) provides some rules regarding a foreclosure on a lien due to unpaid common charges or fines but does not contain a provision regarding the priority of the lien. (P's Exh. A, p. 32.) If the declaration had such a provision that was consistent with section 47-77, then section 47-258 would be inapplicable to the present case due to the express prohibition of the application of CIOA provisions to pre-1984 common interest communities in a way that "invalidate[s] existing provisions of the declaration, bylaws or surveys or plans of those common interest communities." General Statutes § 47-216. This was the situation in Mountain Brook Property Owner's Assn., Inc. v. Saldamarco, Superior Court, judicial district of New Haven, Docket No. CV 94 0356174 (June 6, 1995, Celotto, S.T.R.) ( 14 Conn. L. Rptr. 563, 564), a case relied upon by Eastern in its memorandum. In Mountain Brook, the court ruled that application of General Statutes § 47-258(e) (Rev. to 1995), which at the time provided a two-year period in which to bring an action to enforce an assessment lien prior to the lien becoming extinguished, would invalidate a provision of the declaration stating that unpaid assessments are liens upon the land "until they are paid." Id. In the present case, application of section 47-258 would not invalidate any substantive provisions of the declaration. Thus, the declaration in this case is not bound to the provisions of section 47-77.
There is no dispute that the plaintiff is a common interest community created prior to January 1, 1984 and that all events and circumstances in this matter occurred subsequent to January 1, 1984. None of the parties argue that section 47-217, which provides several exceptions to section 47-216, applies in this case. Thus, the court rules that the priority relationship between the plaintiff's statutory lien and Eastern's mortgage interest is dictated by section 47-258, which applies via section 47-216.
Eastern also raises constitutional arguments in its claim that section 47-258 should not apply to this foreclosure action. Eastern argues that application of section 47-258 would violate the contract clause of the constitution of the United States, article one, § 10, which mandates that "[n]o State shall . . . pass any . . . Law impairing the Obligation of Contracts . . ." "Although the language of the Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State to safeguard the vital interests of its people." (Internal quotation marks omitted.) Energy Reserves Group, Inc. v. Kansas Power Light Co., 459 U.S. 400, 410, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983). "The threshold inquiry is whether the state law has, in fact, operated as a substantial impairment of a contractual relationship . . . The severity of the impairment is said to increase the level of scrutiny to which the legislation will be subjected . . . Total destruction of contractual expectations is not necessary for a finding of substantial impairment . . . On the other hand, state regulation that restricts a party to gains it reasonably expected from the contract does not necessarily constitute a substantial impairment." (Citations omitted; internal quotation marks omitted.) Id., 411. "This inquiry has three components: whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether the impairment is substantial." General Motors Corp v. Romein, 503 U.S. 181, 186,112 S.Ct. 1105, 117 L.Ed.2d 328 (1992).
Eastern cites several cases that have applied a constitutional analysis to condominium declarations. In Coral Lakes Community Association, Inc. v. Busey Bank, N.A., 30 So.3d 579, 583-84 (Fla.Dist.Ct.App. 2010), the Florida District Court of Appeal for the Second District ruled that a statute making purchasers at foreclosure liable for unpaid assessments could not apply because it was passed subsequent to a declaration that provided that successors in title are not liable for assessments. Citing the Florida constitution's provision on laws impairing the obligation of contracts, the Florida court noted that "[t]o hold otherwise would implicate constitutional concerns about impairment of vested contractual rights." Id., 584. The court's decision was premised on the fact that the declaration contained specific language about the priority of claims in foreclosure: "[B]ecause of the Declaration's plain and unambiguous language subordinating any claim for unpaid [association] assessments to a first mortgagee's claim upon foreclosure or deed in lieu of foreclosure, it controls and absolves the Bank, as first mortgagee, from liability for any assessments accruing before it acquires the parcel." (Emphasis added.) Id., 583-84. The declaration contained this language so as "to entice lenders to finance purchases in its community." Id., 584. Furthermore, the Florida lien priority statute went into effect in 2007, one year after the note and mortgage were executed. Id., 581, 582 n. 3.
Unlike the declaration in the Coral Lakes decision, the declaration in the present case does not contain plain and unambiguous language about the subordination of common charges to mortgages, and section 47-258 existed at the time Eastern originated its loan to Head in 2006. In addition, while Eastern claims that it relied on the declaration when it originated the loan, it provides no evidence in support of this claim. Thus, the court rules that the Coral Lakes decision, while instructive on the scope of constitutional protections in a condominium foreclosure setting, is limited to its facts and not relevant to the present case.
The other decision cited by Eastern in support of its constitutional argument, Chase Manhattan Mortgage Corp. v. Spina, 325 N.J.Super. 42, 737 A.2d 704 (N.J.Super.Ct.Ch.Div. 1998), is inapplicable for the same reason. At the time that the mortgage agreement in Spina was entered into in 1992, New Jersey law did not grant a priority to a condominium association for assessment liens. Id., 51. A statute that went into effect in 1996 granted the association limited priority for the first time. Id. The Chancery Division of the New Jersey Superior Court ruled that this statute could not apply in this case because "at the time of the mortgage agreement in 1992, Chase could not have considered the possibility of a condominium association lien taking priority since the statute granting the association a priority was not enacted until almost four years later." Id., 52. The bank prevailed on summary judgment. Id. Just as the Coral Lakes decision discussed above, the Spina ruling concerned a statute passed subsequent in time to the execution of the mortgage. Both decisions are irrelevant to the constitutional analysis in this case.
The contract at issue here, the condominium declaration recorded in 1973, does not contain an agreement regarding the priority of the assessment lien. Under the contract clause, the court does not need to reach the question of impairment in the absence of agreement pertaining to the specific terms at issue. General Motors Corp v. Romein, supra, 503 U.S. 186-87. Accordingly, this court rules that application of section 47-258 to this foreclosure matter is consistent with the contract clause.
Eastern also cites to the constitution of Connecticut in support of its constitutional argument. The reference in Eastern's brief to article second, § 5, of the constitution of Connecticut, is not helpful, because article second, addressing "the distribution of powers," is not divided into sections and does not address private contracts. The state constitutional issue has not been briefed and will not be considered by this court. See, e.g., Connecticut Light Power Co. v. Dept. of Public Utility Control, Office of Consumer Council, Superior Court, judicial district of New Britain, Docket No. CV 05 4007101 (August 29, 2006, Levine, J.) ( 42 Conn. L. Rptr. 113, 117) (declining to address a contract clause argument that was inadequately briefed by the plaintiff).
Furthermore, to the extent that Eastern moves for attorneys fees in its objection to summary judgment and cross-motion for summary judgment, this motion is denied. No conduct by the plaintiff thus far entitles Eastern to attorney's fees.
Accordingly, the court finds that there is no genuine issue of material fact as to the application of section 47-258 to this foreclosure action. Thus, the plaintiff's assessment lien is senior in priority to Eastern's mortgage. The plaintiff's motion for summary judgment is granted. Eastern's cross-motion for summary judgment is denied.