Opinion
No. X 01 CV 94 0159297
April 20, 2007
MEMORANDUM OF DECISION RE MOTION FOR CONTEMPT
Factual Background
The plaintiffs are lessors of the land underlying the Oaks condominium complex ("Oaks") who here ask the court to find in civil contempt certain members of the Board of Directors of the condominium association ("Association") and its property managers, Palmer Management Company ("Palmer") and Group Concepts, for their failure to comply with the Order of Hodgson, J., more about which will later here be said. The claim is that monies due them for ground lease rents have not been paid and that that sum plus interest (and costs) ought be awarded.
At the hearing on this matter, the plaintiffs withdrew their claims as against some defendants. The remaining individual defendants are Rick Padro, Caroline Newton, William Farr, and Louis Nacca. The remaining defendants are the property managers.
The plaintiffs owned two (2) parcels of real property at 79 and 80 Claudia Drive in West Haven on which there was an apartment building on each lot. They sold both buildings in 1982 to Melrose Apartments, Inc. (Melrose) and concurrently executed a ground lease whereby the plaintiffs had a leasehold interest in the underlying land for ninety-nine (99) years. Melrose then declared a condominium (the Oaks) consisting of a total of one hundred eight (108) units within the two (2) buildings. Under a Deed of Condominium Unit and Assignment of Leasehold Interest, purchasers of the condominium units received a fee simple interest in the units and an assignment of a fractional interest in the underlying ground lease. Thus, individual unit owners were responsible for rent payments to these plaintiffs; those ground lease rents were actually made to the Association which remitted the payments to the plaintiffs. Our Supreme Court has earlier found that this "hybrid" form of condominium — in which unit owners obtained both a fee simple interest in the units and a leasehold interest in the land — was permissible under this state's Condominium Act of 1976, C.G.S. § 47-68a et seq. Celentano v. Oaks Condominium Association, 265 Conn. 579, 595 (2003).
The units varied in size and the amount unit owners were required to pay in ground lease rents varied according to unit size.
In 1995, the defendants began withholding the rents due under the terms of the ground lease and depositing them in an escrow account. Plaintiffs sued and, after a bench trial, the court (Hodgson, J.), on January 11, 2001, rendered partial summary judgment for the plaintiffs. Pertinent to this motion is that the court ruled damages for ground rents collected but not paid would be calculated after an accounting of monies actually collected from unit members but not remitted from January 1, 1995, to the date of that ruling. Exhibit 50, p. 47. Following receipt of the accounting and a hearing, the court issued a Supplemental Judgment in favor of the plaintiffs as against the Association in the total amount of "$614,499.06 . . . plus ground rents collected for the month of October 2001, and ground rents due under the ground leases for each month hereafter." Exhibit 48, p. 2. Interest was also awarded. Id., at p. 3. The court enjoined "[t]he defendants, their agents, servants and employees . . . from making any expenditure from any escrow account established as a repository of ground rents, and are ordered to deposit all ground rents collected from unit members hereafter into the escrow account until such time as they are transferred to the plaintiffs." Id. With regard to the defendants' appeal and the plaintiffs' cross-appeal of the court's January 11, 2001, Memorandum of Decision and Revised Judgment of November 1, 2001, which was affirmed by the Supreme Court ( 265 Conn. 579), the Court in dicta stated the following which is of some relevance to the instant motion:
Other issues therein decided are not relevant to this court's adjudication.
We agree that the plaintiffs brought the present action against the members of the Association's Board of Directors in their official capacities, not as individual unit owners. This fact is evidenced by the nature of the claims alleged such as the plaintiffs' claim that the defendants had been negligent in the collection of amounts due from unit owners (Emphasis added.) 265 Conn., at 619-20.
Thus, the Supplemental Judgment of November 1, 2001 (Exhibit 48) governs.
The injunction issued by Hodgson, J. provides the basis for the instant Motion for Contempt with Order to Show Cause as against the four (4) Board members of the Oaks and the property managers for knowingly failing to comply with the judgment. The matter was heard over eight (8) days beginning June 21, 2005, and concluding April 7, 2006. Additionally, Palmer, Padro, Newton, and the plaintiffs filed legal memoranda and, at their request, the court heard further argument on January 22, 2007.
Of some relevance to this court's determination is that the Oaks, on November 21, 2003, filed a petition for bankruptcy relief under Chapter 11. The Oaks retained Ira Charmoy, Esq. for that purpose. During the pendency of that proceeding, the plaintiffs (here) and the Oaks reached a settlement agreement; as part of that agreement, the plaintiffs expressly reserved their right to proceed with regard to "any and all claims they may have against all other entities including but not limited to the present and former members of the Board, . . . and present and former property managers, by contempt or otherwise . . ." Exhibit A to Order to Show Cause, Order Approving Compromise and Settlement, Para D. The Bankruptcy court modified the automatic stay entered by this court on November 26, 2003, to pursue the plaintiffs' claim against "any and all persons other than the Debtor" (The Oaks). Id., Para I. The bankruptcy Order which entered provided the Association "shall retain the proceeds of ground lease rents in the amount of $84,864.20" collected prior to the petition date of November 21, 2003, but not remitted to the ground lessors (the plaintiffs here) without prejudicing the lessors' right to assert that amount as a secured claim against the Debtor (identified as the Association) and claims against "all other persons arising from the Debtor's retention of such proceeds . . ." The instant motion was filed three (3) weeks after the bankruptcy Order of January 19, 2005.
That amount represented $31,010.39 paid or to be paid the Oaks' bankruptcy lawyer and $53,853.81 in ground lease rents used by the Oaks after commencement of the bankruptcy action.
The Oaks' By-Laws
Article II, Section 3 of the Oaks' By-Laws (Exhibit H) states the Board of Directors shall have: a) the powers and duties necessary for the administration of the affairs of the Association and may do all such acts or things "except as may not be delegated to it by law or by the Declaration or by the By-Laws themselves"; b) the power to make such regulations as necessary in the management of the Oaks Condominium; and c) the power to make repairs, additions, and improvements to or alterations of the property as well as repair to and restoration of the property after damage or destruction by fire or other casualty or as a result of condemnation or eminent domain. Article II, Section 12 provides that blanket fidelity funds (in an amount to be determined by the exercise of the best business judgment) shall be required to be maintained by the Association "for all officers, directors . . . and all other persons handling or responsible for funds of or administered by the Association" and, "where the Association has delegated some or all of the responsibility for the handling of funds to a management agent, such bonds shall be required for the "officers, agents, or employees handling or responsible for funds of, or administered on behalf of, the Association."
In no event was the aggregate amount of the bonds so maintained to be "less than a sum equal to three months' aggregate assessments on all units plus reserve funds." No party — either during the trial or in briefs — addressed the absence of any evidence regarding this requirement as referable to the Association's liability for the apparent failure to provide this protection or the implication of the same for these parties.
Article II, Section 13 has this to say regarding the liability of the Officers and Directors:
No officer receives any compensation for services rendered. By-Laws, Art. IV, Section 9.
The officers and the members of the Board of Directors shall not be liable to the Unit Owners for any mistake of judgment, negligence or otherwise, and shall only be liable for their own individual willful misconduct or bad faith. The Association shall indemnify and hold harmless each officer and member of the Board of Directors against all contractual liability to others arising out of contracts made on behalf of or in the name of the Association, unless any such contract shall have been made in bad faith or contrary to the provisions of the Declaration or of these By-Laws. It is intended that the officers and members of the Board of Directors shall have no personal liability with respect to any contract made by them on behalf of the Association. It is also intended that the liability of any Unit Owner arising out of any contract made by the officers or the Board of Directors shall be limited to such proportion of the total liability thereunder as his interest in the common elements bears to the interest of all Unit Owners in the Common Areas.
Article V, Section 1 provides the Board of Directors shall, from time to time and at least annually prepare a budget, determine the amount of the common charges paid by unit owners to meet common expenses, and allocate and assess those common charges among unit owners according to their respective common interests. Article IX, Section 1 gives to the Board or the managing agent the duty of maintaining "financial records and books of account . . ."
The Law of Contempt
"Contempt is a disobedience to the rules and orders of a court which has power to punish for such an offense." (Internal quotation marks omitted.) In re Jeffrey C., 261 Conn. 189, 196 (2002). "The court's authority to impose civil contempt penalties arises not from statutory provisions but from the common law . . . The penalties which may be imposed, therefore, arise from the inherent power of the court to coerce compliance with its orders. In Connecticut, the court has the authority in civil contempt to impose on the contemnor either incarceration or a fine or both." (Internal quotation marks omitted.) Gil v. Gil, 94 Conn.App. 306, 310 (2006). Civil contempt must be distinguished from criminal contempt. The former is characterized by actions directed at the rights of an opposing party while the latter consists of conduct directed at the dignity and authority of the court. In re Jeffrey C., supra, 261 Conn. at 197; General Statute § 51-33a(a); Practice Book §§ 1-13A, 1-14. Civil and criminal contempt are also distinguished by the intent of the punishment and the nature and character of the punishment imposed. "Contempt is civil if the intent of the punishment is coercive and the punishment is avoidable. If the effect of the punishment is such that a contemnor can avoid or reduce imprisonment, fine or any other punishment imposed, the contempt is civil in nature . . . Civil contempt is designed to compel future compliance . . . Criminal contempt . . . is punitive in nature. If the contemnor cannot avoid or has no opportunity to purge the defiance, the act of defiance is criminal." (Citations omitted.) Monsam v. Dearington, 82 Conn.App. 451, 456-57 (2004). Civil contempt may be either direct or indirect. LaMacchia v. Chilinsky, 85 Conn.App. 1, 4, cert. denied, 271 Conn. 942 (2004). Direct contempt concerns conduct in the presence of the court whereas indirect contempt concerns conduct outside the court's presence. Id. In cases of indirect contempt, the alleged contemnor is afforded constitutional safeguards. Cologne v. Westfarms Associates, 197 Conn. 141, 150 (1985). "[D]ue process of law . . . requires that one charged with contempt of court be advised of the charges against him, have a reasonable opportunity to meet them by way of defense or explanation, have the right to be represented by counsel, and have a chance to testify and call other witnesses in his behalf either by way of defense or explanation." (Internal quotation marks omitted.) Id. The movant in a civil contempt proceeding has the burden of establishing, by a preponderance of the evidence, the existence of a court Order and noncompliance with that Order. Statewide Grievance Committee v. Zadora, 62 Conn.App. 828, 832 (2001) (Citations omitted).
With regard to the standard applicable to the burden of proof in matters such as is before the court, defendants Palmer and Newton urge the adoption of a "clear and convincing" standard and cite to superior court cases that are unpersuasive. In Bowers v. Bowers, the claim was fraudulent inducement and, thus, the appropriate application of a higher standard not here required because no claim of fraud is advanced. See Bowers, 1999 Conn.Super. LEXIS 3426, at HN9. The court in Ferracci v. Ferracci, 2001 Conn.Super. LEXIS 3753 (Dyer, J.) references both proof "by a preponderance of the evidence" (*2) and "clear and convincing evidence" (*11) without citation to any legal authority for application of the more stringent standard. The court in DiFiore v. DiFiore, 1996 Conn.Super. LEXIS 2975 (Kavanewsky, J.) [ 18 Conn. L. Rptr. 192] found the plaintiff husband in contempt without articulating the standard applied. Judge Sheldon, citing to Statewide Grievance Comm., supra, applied the "fair preponderance" standard in Keeney v. Buccino, 2004 Conn.Super. LEXIS 2468, at *29, *36. Judge Beach in Rocque v. Light Sources, Inc., 2004 Conn.Super. LEXIS 3661 [ 38 Conn. L. Rptr. 424], cited approvingly the "fair preponderance" evidence he presumed was applied in Cologne v. Westfarms Associates, 197 Conn. 141 (1985), but which was never directly stated. He went on to state he did not find "compelling" the use of that standard where there was the prospect of fines and loss of liberty (2004 Conn.Super. LEXIS, at *11), and then applied the lesser standard in the case before him. Id. "Proof by clear and convincing evidence is an intermediate standard generally used in civil cases involving allegations of fraud or some other quasi-criminal wrongdoing or when particularly important individual rights are involved." Isler v. Isler, 50 Conn.App. 58, 75 (1998), rev'd on other grounds, 250 Conn. 226 (1999).
"To constitute contempt, a party's conduct must be wilful . . . Noncompliance alone will not support a judgment of contempt." (Internal quotation marks omitted.) Kennedy v. Kennedy, 88 Conn.App. 442, 443-44 (2005), cert. denied, 275 Conn. 902 (2005). A court "may not find a person in contempt without considering the circumstances surrounding the violation to determine whether such violation was wilful." (Internal quotation marks omitted.) Gina M.G. v. William C., 77 Conn.App. 582, 592 (2003). However, the contemnor need not intend to violate the order so long as that party intentionally engaged in the prohibited conduct. See Bennett v. Green Acres Ass'n., Superior Court, Complex Litigation Docket at Tolland (Docket No: X07-CV-04-4002902) (November 1, 2005, Sferrazza, J.), citing to DeMartino v. Monroe Little League, Inc., 192 Conn. 271, 279 (1984). The contemnor must establish that he cannot comply or was unable to do so. Rocque v. Design Land Developers of Milford, Inc., 82 Conn.App. 361, 371 (2004). There must be the ability to purge oneself or the sanction (which may be the imposition of fines, imprisonment, or both) is considered punitive and inappropriate for civil contempt. National Loan Investors, L.P. v. World Properties, L.L.C., 79 Conn.App. 725, 738 (2003), cert. denied, 267 Conn. 910 (2004). "[I]t is within the sound discretion of the court to deny a claim for contempt when there is an adequate factual basis to explain the failure to honor the court's order." (Citations and internal quotation marks omitted.). Sablosky v. Sablosky, 258 Conn. 713, 718 (2001). The burden is on the contemnor to establish that he cannot comply. Id. at 273.
Adjudication
Rick Padro served as a member of the Association's Board of Directors from July 2002, through the end of May of 2003; he was President through December 18, 2002, when he resigned. Carolyn Newtown was a board member from June of 2002 until approximately March 27, 2003. William Farr was a board member from approximately July or August of 2002 through the annual meeting in June of 2004. Louis Nacca has been — and continues to be — a board member since approximately July of 2002. He has been President of that group since January of 2003.
Prior to February 1, 2003, the financial matters of the Association were managed by a property management company called Group Concepts. Under our law, condominium associations have the authority to delegate management responsibility to outside managers. See C.G.S. § 47-80(c)(1). Art. II, Section 3(a) of the By-Laws rests in the Board the general authority to hire a Property Manager to handle the Association's financial matters. Id. For the relevant years, Melissa Saville was the representative handling the Association's account for Group Concepts. Ms. Saville testified that she oversaw the preparation of financial reports which were mailed to the Board between the 15th and 20th of each month and prior to its next scheduled monthly meeting (6/21/05 Tr., p. 54); she stated the reports were done in summary form in that they provided a "rundown" of income and account balances ( Id., at 70-71.) and that the Oaks was, prior to her replacement in early 2003, riddled with significant losses and debts — specifically, $42,125 for the period from March through November of 2002 ( Id., at 81). The losses were incurred primarily for reason of the doubling of insurance premiums subsequent to a significant fire loss, substantial building repair costs, and municipal taxes owed ( Id., at 78-82). In fact, at Board meetings in September and October of 2002, she suggested an increase in common fees as a possible solution to the Oaks' persistent and growing financial problems ( Id., at 84). She was made aware of the Order prohibiting the use of ground lease rents for any reason other than placement into the escrow account but had never personally seen the Order which was kept by the head of the accounting department at Group Concepts ( Id., at 57-59; 6/22/05 — A.M., Tr., at 8). On cross-examination, it was established that the monthly summary sheets she provided the Board (together with the monthly reports) were discontinued in September of 2002 ( Id., at 22.), that she was aware that no monies were deposited into the escrow account for ground lease rents from at least October of 2002 through January of 2003 ( Id., at 28.), and that it was not her responsibility (but that of the accounting department of Group Concepts) to deposit the ground lease rents collected in the land lease escrow account ( Id., at 57). She recalled the Association's selling two (2) condominium units in order to pay for such items as a necessary upgrade of the fire alarm system ( Id., at 47.) and that, by the time that Group Concepts had received its termination letter, the Oaks' "expense" account had ballooned from approximately $1,400 per month to $54,000 or $60,000 per month. Plaintiffs' counsel was able to effectively demonstrate that not all of the claimed emergencies required full payment immediately but it was undisputed that far less money was coming in (whether by way of condominium fees collected or ground lease rents — or a total of both [ignoring for the moment only that ground lease rents were not to be used for any purpose other than for remittance to the plaintiffs]) than was required to meet the two (2) buildings' needs without an influx of cash that could only have occurred by an increase in fees or a special assessment (There had already been at least one (1) such increase and one (1) prior special assessment). Saville testified that over $140,000 had been spent on necessary roof repairs but that the roof still leaked when she was terminated. Despite Saville's awareness that some Board members considered her at fault for not informing them of the full status of the ground lease rents escrow account and the extent to which remittances had fallen behind, she testified to her belief the tenants — to include these four (4) individual — defendants — did not have the ability to pay yet another meaningful increase in common fees or another significant special assessment (6/22/05 — A.M., Tr., at 100).
Saville did not become Property Manager for the Oaks until six (6) months before the Board terminated Group Concepts in January of 2003. Palmer Property Management, Inc. took over for Group Concepts effective February 1, 2003 (2/2/06 — P.M., Tr., at 8-9). The Association had by then fallen three to four (3-4) months behind in remitting the ground lease rents to the escrow account.
The "summary sheets" specifically called out — as separate line items — both the "escrow" and reserve accounts. 6/22/05 — A.M., Tr., at 23.
Board members consistently testified to Ms. Saville's ineffectiveness in handling their matters. She frequently failed to attend Board meetings (or left shortly after distributing the reports without explaining them), failed to return phone calls, appeared inpatient responding to members' inquiries, etc. The court finds it as likely she was simply overwhelmed by the number and extent of the financial problems the Association was experiencing and the refusal of unit owners (and some Board members) to consider yet another special assessment or increased monthly fees to address both the problem of remitting ground lease rents and other pressing financial demands — i.e., insurance, fire safety, etc.
Sal Garfi of Palmer Property Management succeeded Melissa Saville as the Oaks' property manager. Saville testified she "believed" she told Garfi of the Order of Judge Hodgson ( Id., at 76), and that, in the month following Group Concepts' termination, files including unit owners' information, contracts, cancelled checks, and financial reports for the prior three (3) years were boxed up and picked up by Garfi ( Id., at 87-88); she stated that, though she prepared a summary of pending issues to go with the files, she could not say that Garfi received that summary. Id. at 91
Thus, Garfi took over under very difficult circumstances. Not only was the Oaks in serious financial circumstances and obligated under an Order with which there had not been compliance for at least three-four (3-4) months but he was working with board members whose President, co-defendant Rick Padro, had resigned in the very same month the Board fired Saville's group. Padro then became the Board's Secretary. Additionally, the lawyer who had for some time been the trustee on the ground lease rent account was replaced by another lawyer in 2003.
William Farr was a Board member from the summer of 2002 through June of 2004. Id. at 118. Though he had never been shown the Order, he knew the ground lease rents were to have been put into escrow; it was his strong feeling it was Group Concepts' responsibility to separate the ground lease monies received from the common fees paid and to hold the former for the plaintiffs Id. at 120. Regarding the financial reports prepared by Group Concepts, Farr's tendency was to look to the "bottom lines," which indicated balances or debits. 6/22/05 — P.M., Tr., at 3. He testified to there having been an increase in common fees in April of 2002, which increase was necessitated by the urgency of accomplishing repairs to the fire alarm system and elevators, increased insurance premiums, and outstanding legal fees. In November of 2003, he, Garfi, and Lou Nacca went to the New Haven law office of Ira Charmoy, Esq. with regard to the Oaks' filing bankruptcy. When the trio asked Charmoy whether ground lease rents could be used to pay his fees in a bankruptcy, Charmoy's response was in the affirmative. Id., at 27. Farr testified Charmoy indicated he would get the court's permission to use those funds to pay both his retainer fee and other pressing bills. 9/15/05 — A.M., Tr., at 55. Relevant to this court's determination was Farr's testimony the Board "didn't really" have a functioning Treasurer in the sense that all of the duties traditionally assumed by a Treasurer had in fact been delegated to the Property Manager and he testified he (Farr) had no authority to sign checks nor had he access to any Association checkbook. 9/15/05 — A.M., Tr., at 87. In fact, Farr had not even been formally sworn in as a Board Member and he had not received any training regarding the duties of Treasurer (the office he held).
Farr had testified in a 2002 deposition that he knew ground lease rents were to have been put into an escrow account (Exh. #25, p. 60) and that he was aware the Association's Paine Webber and Merrill Lynch accounts contained ground lease rents; he also then testified that he thought the Association's Fleet Bank CDs and the Smith Barney account might also contain ground lease rents. See 6/22/05 — P.M., Tr., at 23-25.
Farr presented as unsophisticated in financial matters. At the time of his testimony, he was retired and living on Social Security. He recalled telling Rick Padro, in the fall of 2002 and with reference to the monies ordered to be paid the plaintiffs, "As long as Mr. LoRicco's (plaintiff-lessor's) monies are being put in his fund where it belongs, the only thing that I'm concerned about is the general operating expenses . . ." 9/15/05 — A.M., Tr., at 149. He also testified to the Board's receipt of a letter from LoRicco dated January 3, 2003, in which LoRicco advised the Board of the Association having a shortfall of $2,700 per month ($32,400 annually) in operating costs, $50,000 owed to creditors, an 18% interest on real property taxes still outstanding, buildings in total disrepair, annual insurance costs which could devastate common charges, the need for fire alarm updates, and the absence of any reserve account. LoRicco's suggestion was to increase common charges by at least $90/month ($11,240 annually) plus a special assessment of $56,650 annually — an average of $550 per unit. Id. at 136-37; Exh. G. While the clear intent of that letter from the writer's view was to motivate the Board to take some action that would produce an influx of money so as to stop the bleeding, conspicuously absent was any reference to the Board's failure to make the ordered land lease payments. Though written during a period when a shortfall has been claimed, a reader of the letter (i.e., Board members) would likely have concluded payments were current. The letter lends credence to Farr's testimony that it was after Sal Garfi (of Palmer Management) came on board (approximately late January or February of 2003) that he (Farr) realized ground lease rents were not being segregated as required. 9/15/05 — A.M., Tr., at 114. LoRicco's letter of January 3, 2003, must be read in context with LoRicco's of October 22, 2002, (Exh. E) in which he advised, "I have received your message agreeing to our (emphasis added) adjustment of land lease payments effective January 1, 2003." Thereafter, Saville informed unit owners of a "mandatory" increase in rental fees due the plaintiffs in the amount of $22,000 per year beginning January 1, 2003, Id. at 126. That "mandatory" increase was initiated by the plaintiffs with full knowledge of the Association's financial problems and was "recommended" by Saville. No doubt this action on her part was pivotal in the Board's determination to replace Group Concepts as it shortly thereafter did. A response from the law firm of Robinson and Cole (then representing the Oaks) to Saville's letter and directed to plaintiffs' then lawyer (Sabetta) advised the notice of increase was without legal effect because "a unilateral rent increase" during the pendency of the appeal of Judge Hodgson's rulings.
Louis Nacca served as a Board member from July 2002, and has continued to do so since then, becoming President as of January 2003. 1/24/06 — A.M., Tr., at 10. He testified to the Board having received notice sometime after the Revised Judgment of 11/1/01 that ground lease rents could not be used for operating purposes. It was also his testimony that, when many unit members purchased their units, they did not know of land leases or that they would have to pay, in addition to mortgage payments and common charges, land lease rental fees. 1/24/06 — P.M., Tr., at 10. Like Farr, Nacca was, at the time of his testimony, retired for eight (8) months and living on a fixed income. Id., at 11. He stated there had been an increase in common fees of $60/month in May of 2003 (1/24/06 — A.M., Tr., at 25) and that only larger expenditures — such as repairs to the fire alarm system — required specific approval of the Board ( Id., at 18). He was the Board member who met first with Sal Garfi (and privately) at the end of 2002 or early part of 2003 and he recalled then telling Garfi of the need for land lease monies to be kept in a separate escrow account ( Id., at 28) and that it was his belief Garfi did not receive financial records (or all of them) until sometime in March of 2003. Id., at 17. Nacca considered his contribution to the Board and to the Oaks to be to do what he could to accomplish minor building repair, sweep driveways, etc. and that financial matters would be handled by Garfi once he came on board sometime in January or February of 2003. Id., at 29. His testimony, was that he did not know monies had not been put in the escrow account for land lease rentals in February, March, or April of 2003 until in court on this matter, ( Id., at 30) despite having received monthly reports showing that was so and he recalled no discussions with Garfi or other Board members that ground lease monies were used to pay other bills. Id. "If I noticed it, I would have said something at the time. I believe he, Mr. Garfi, was doing his job and doing a good job, and I didn't bother him with that stuff." Id. He recalled the trip to Attorney Charmoy's office in the fall of 2003 with Farr and Garfi; he did not then know which accounts held ground lease fees and thought that information was necessary only for the property manager's duties Id., at 38. He testified to his belief the money for Charmoy's retainer in filing the bankruptcy matter came from the $60/month increase in common fees the preceding spring, which increase he described as being a "large amount for everyone to pay at the time." Id., at 46. "It was killing them (with reference to unit owners)." Id. He didn't become aware of the issue whether Fleet CDs held by the Oaks contained ground lease rents until January or February of 2004. Id., at 49. His understanding from Charmoy was that Charmoy's $20,000 retainer and monies used to replace moldy carpeting and accomplish some interior painting came "out of the bank. [T]he bankruptcy court allowed us to have that." Id., at 47. Nor did he discuss the same with Mr. Farr at that time (January or February of 2004) since he and Farr were not then getting along. Id., at 48-49. Though Nacca clearly felt bankruptcy offered relief from the Board's financial problems even before the trip to Charmoy's office, he became certain after meeting with Charmoy that it was necessary to file for relief to avoid the plaintiffs' getting a bank execution based upon the Supreme Court's decision affirming Judge Hodgson's rulings (That decision was released on September 2, 2003, and the Board had been advised of such within weeks). He stated Rick Padro was the only Board member to oppose the bankruptcy filing. Id., at 78. Queried about the special assessment the lessors urged in 2002, he responded the unit owners were already "too strapped" and consisted of a "lot of old people on fixed incomes," some of whom had already lost their units as a result of prior increases. Id., at 61-63. Nacca not only felt Board members should have no liability to the plaintiffs vis-a-vis monies unpaid because it was his belief (based upon his understanding of Charmoy's information to them) that a court had approved the use of those monies for general repairs/replacements but because he considered the obligation to pay land lease fees somehow unjust. "[H]e gets 60 percent of the gross of the money. . . . We have to take care of his land. We have to pay his taxes and where does that leave anybody . . .?" Id., at 62. Finally, with regard to a Settlement Agreement reached between the Oaks and these plaintiffs (later here to be discussed), he asserted he had not given Farr permission to ratify the same nor did he know Farr would approve the agreement (At the time Farr did so, he was President). 4/7/06 — A.M., Tr., at 58.
His intentions aside, Mr. Nacca presented as easily angered and impatient. It is clear he had difficulties with other Board members (He "fired" Ms. Newton from the Board because they disagreed on how things should be done ( Id., at 55-56) in addition to having difficulties getting along with Farr.
No evidence supports that conclusion.
Rick Padro came onto the Board in June of 2002 when he became President. Attorney Giovanniello (who then handled the Association's collection matters and the like) testified he provided no instructions to Padro re escrow accounts (9/15/05 — A.M., Tr., at 28) though Padro did know of the existence of an escrow account for land lease rents since sometime in 2001. Id., at 158-63. He testified he did not know of the specific content of the Order of Hodgson, J., but understood only that whatever was in the account had to be paid to the plaintiffs. Id., at 169. He recounted that the monthly summaries provided by Saville were sometimes delivered at the Board meetings ( Id., at 188), thus providing little opportunity for members to study them and to query Saville with regard to them. He iterated the testimony of others regarding work to be done and bills outstanding from July through the end of 2002 (specifically repair of the fire alarm system, insurance fees rising from $30,000 the preceding year to over $100,000, real estate taxes due, etc. [ Id., at 192-95]). He noted the balance in the Association's checking account in August of 2002 was $272 and had been $107.48 as of 7/17/02. Asked to identify at trial where on a monthly report for August of 2002 (Exh. 15) monies deposited in the land lease account was found, he was ultimately able to do so but testified, "Now that you ask me to look at it, but I never knew I should look at that specific item." 9/15/05 — A.M., Tr., at 226. Asked if his reason for not paying greater attention to items in that report indicated he had a desire not to know its contents, his reply was, "Of course no. No, no. That's — it's not not wanting to know what was in it, but knowing that probably the management company was in charge of this, and they knew what was in it, and we relied on them." Id., at 226-27. He testified to the auctioning off of Unit 251 (which had been foreclosed for non-payment of rent) to pay for the fire alarm system (9/20/05 — A.M., Tr., at 11), confirmed unit owners were "enraged" at the suggestion of another special assessment in addition to another monthly increase as proposed by LoRicco ( Id., at 13) and asserted he never had any understanding what, if any, legal responsibility he had to the Association by virtue of his agreeing to serve. He resigned as President in December of 2002 because of the time involved fielding phone calls from unit owners who were often angry, the time meeting with other Board members, etc. while married, the father of two young girls, and having a job requiring travel to art conferences and exhibitions — sometimes abroad. He became Secretary for a short period thereafter. As earlier stated, Padro was opposed to the filing of bankruptcy and he testified he told the others the Board should pay him (LoRicco). 4/7/06 — P.M., Tr., at 122.
He also stated she frequently provided only "verbal" summaries. Id., at 224.
Caroline Newton was elected to the Board in June of 2002 but did not serve a full term, having been fired by Nacca in February or March of 2003 (though, startlingly, she testified she didn't learn of her firing until sometime in 2004 [9/20/05 — A.M., Tr., at 33]). Much of Ms. Newton's testimony corroborated that of other defendants regarding pressing financial problems and warrants no further repetition. During Ms. Newton's testimony, the court learned there were two (fires) on the subject premises — one (1) in January of 2001 and another before December of the same year. Also instructive was her testimony that, in 2001, her common fees on her unit increased from $210 to $477 (which was higher than her mortgage payment), went down to $283 (which may mean that the increase was in fact a special assessment for a limited time only), and then went up again to $350. Id., at 46. Also instructive is that, in the fall of 2002, she suggested an increase of $100 every two (2) months so as to have available an emergency fund (the "reserve" fund required by the By-Laws) but that idea was rejected. The payment of $350 in common charges (which was in effect when she testified in September of 2005) was an even greater burden on Ms. Newton then because the multiple sclerosis from which she had suffered since 1991 began to worsen in 2001 and she had to end her employment outside her home to work only a few hours inside the home. Her income has significantly declined; it consists primarily of $12,000-$14,000 per year in disability payments. Id., at 78. She stated that, while she was on the Board, ground lease rents were not used to pay other expenses. Id., at 80. She knew of the Order but had never seen it. Id., at 110. Interestingly, Ms. Newton had in earlier years been a property manager herself but she testified it was then her practice to put monies collected in her account and to pay the bills out of the same account. 9/20/05 — P.M., Tr., at 22. Without any financial training and without being provided instructor on how to read financial reports such as those provided the Board by Group Concepts, she stated she was unable to understand them and her testimony underscored the same. See e.g., 9/20/05 — A.M., Tr., at 92-98. In fact, despite Palmer Management's reports being simpler to understand than those provided by Saville (Only one accounting method was used throughout), Newton, with reference to a Board meeting in March of 2003, stated she could not understand that report either without assistance. 9/20/05 — P.M., Tr., at 30.
They were $162 when she moved in many years earlier.
Sal Garfi is President and sole owner of Palmer Property Management, Inc., the successor to Group Concepts as the Association's Property Manager. He said Nacca first called him in December of 2001; there was no discussion of Judge Hodgson's Order when he met with Nacca in early January of 2002. In fact, he testified to not learning of the existence of the land leases until late January or early February 2002, ( Id., at 48) when he also learned of the Order and the pending appeal. He requested from LoRicco a copy of that Order in mid-February but did not in fact receive a copy until Robinson Cole sent him it in March of 2003. Garfi was insistent it was not until March or April of 2003 that he first received and read the Order (9/20/05 — P.M., Tr. At, 58 and 82) though he did testify LoRicco told him of the Order in a letter of 3/13/03 ( Id., at 84). He first learned of a trustee account containing ground lease rents in March of 2003 (a Payne Webber account containing $524,197.75); he learned of a Merrill-Lynch account (containing $144,113.00) at approximately the same time. A transition balance sheet from Group Concepts additionally listed a Smith Barney Money Market account showing $23,770 and Fleet Bank CDs containing $20,685. CT Page 6848 Id., at 64-66. For reasons unclear to the court, the Paine Webber account (containing over half a million dollars) was never transferred to him and he never handled monies from that account (Plaintiffs never challenged that assertion and it is not therefore known who had possession of that account or whether whatever funds it now holds is available for distribution). See 9/20/05 — P.M., Tr., at 68. He testified to having been told by the Board that he could not use ground lease rents collected in February, March, and April of 2003 to pay other expenses. In fact, February and March ground lease rental income was used to pay operating expenses and his explanation of this was a combination of his not having yet seen a copy of the Order and the pressing status of the myriad financial problems facing the Association which he considered to be a priority since if, for example, electric and water bills were not made current and electricity were cut off, that would prevent the fire suppression system and elevators from operating and, thus, directly impact the health, safety, and welfare of many of the units owners — in particular the elderly and disabled. (There had been two [2] fires in 2002.) See e.g., Id., at 87, 105, 110-11. In February-April of 2003, only $28,000 in such rents were collected (1/24/06 — A.M., Tr., at 51); it was in May of 2003 that he first put ground rental payment into escrow (9/20/05-P.M., Tr., at 117); he paid $7,000 then but nothing in June or July because "there was no money." 2/2/06 — P.M., Tr., at 38-39. He started to catch up in August of 2003 when he paid the plaintiffs $19,774. Id. Beginning in October, he began sending payments directly to Attorney Sabetta as the plaintiffs' representative. Garfi testified to much difficulty getting documents from Group Concepts and never got to meet directly with Melissa Saville despite his efforts to do so. It was not until April or May of 2003 that he received all of Group Concepts' records re the Oaks; among boxes of records, he found a copy of the Order (which by then he had already obtained). Despite his experience as a Property Manager, he testified to finding Saville's financial reports confusing in that the summary sheets used a cash basis reporting method and the detailed reports (affixed to the monthly summary sheet) were prepared using the accrual reporting method. The obvious question raised, thus, is on what basis should there have been any reasonable expectation the four (4) individual defendant-members were capable of reading and processing the information in these reports when they had no appropriate accounting or financial training? Additionally, assuming arguendo they were capable of asking probing questions, would any Board member then have had confidence Melissa Saville would have provided the same (assuming she was at that meeting and had stayed long enough to engage in a meaningful dialogue)? The court is entirely unpersuaded she ever had either the interest in or ability to be the agent for change the Board sorely needed. In September of 2005, Garfi testified the Oaks' bills were then current, that there was a positive cash flow, and, that, once the bankruptcy petition was filed (November of 2003), all amounts being collected for ground lease rents were being paid to the plaintiffs. There remains, however, a shortfall (Garfi and LoRicco dispute the extent of the same).
In March of 2003, Nacca "ordered" him to pay all 2002 bills (Obviously, he could not then do so). Nacca had not the authority to do so — and should not have done so.
In February-March of that year (when Garfi took over), the Oaks had only $670 in the bank. Id., at 80. As of March 26, 2003, the outstanding electric bill was $1,151 and the outstanding water bill was $7,317.
Regarding that shortfall, Garfi asserted, on January 24, 2006, he believed the Oaks could repay the plaintiffs a maximum of $1,500 per month (in addition to turning over whatever amounts were collected each month) assuming no emergencies though he had not received Board approval to do so. See also 2/2/06 — A.M., Tr. at 95 in response to the court's question.
That represented what Garfi then believed was the extent to which there were what he described as "discretionary" funds remaining each month. 2/2/06 — A.M., Tr., at 86.
Civil contempt involves the wilful violation of an applicable court order. Marcil v. Marcil, 4 Conn.App. 403, 405 (1985). To establish his contempt claim, the aggrieved party must prove by a fair preponderance of the evidence both that the alleged contemnor violated the order and that such violation was wilful. See e.g., Statewide Grievance Committee v. Zadora, 62 Conn.App. 828, 832 (2001) and Richards v. Richards, 78 Conn.App. 734, 741-42, cert. denied, 266 Conn. 922 (2003). Noncompliance alone will not support a judgment of contempt. Id. "[A] finding of contempt depends upon the facts and circumstances surrounding it." Conn. Light Power Co. v. O'Hara, Jr. et al., Tufano v. Tufano, 18 Conn.App. 119, 124 (1989). Whether ambiguity in an order will preclude a finding of contempt is within the discretion of a trial court. Sablosky v. Sablosky, 258 Conn. 713, 718 (2001). "A good faith dispute or misunderstanding will preclude a finding of wilfulness . . . Whether it will preclude such a finding is ultimately within the trial court's discretion. [Also it] is within the sound discretion of the court to deny a claim for contempt when there is an adequate factual basis to explain the failure to honor the court's order." Id. (Citations and internal quotation marks omitted.) Sablosky went on to hold that "a finding of wilfulness as a predicate to a judgment of contempt is not barred, as a matter of law, by the fact that the terms of the judgment involved are ambiguous. Such ambiguity is merely one of the factors for the trial court to take into consideration in exercising its discretion regarding a finding of wilfulness." Id., at 723. (Citation omitted.) "The contempt remedy is particularly harsh . . . and may be founded solely upon some clear and express direction of the court . . . One cannot be placed in contempt for failing to read the court's mind." Blaydes v. Blaydes, 187 Conn. 464, 467 (1982). In civil contempt proceedings, the contemnor must be in a position to purge himself since, if he cannot, the sanction imposed would cease to be remedial and coercive but would become wholly punitive in actual operation. See Mays v. Mays, 193 Conn. 261, 266 (1984). In its discretion, a court may deny a motion for contempt if the contemnor establishes he cannot comply for reasons which are not of his own making. See Eldridge v. Eldridge, 244 Conn. 523 (1998); Marcil v. Marcil, 4 Conn.App. 403, 405 (1985).
Still another aspect of "surrounding circumstances" is reliance upon advice of counsel. The majority of the decisions considering such reliance have concluded it is not an absolute defense to contempt but that it is a factor to consider in assessing whether a wilful violation has occurred. So too is the "overall compliance effort" a factor to consider. See e.g., Rocque v. Design Land Developers of Milford, Inc., 82 Conn.App. 361 (2004); Cologne v. Westfarms Associates, 197 Conn. 141, 157 (1985); Rocque v. Light Sources, Inc. et al., 2004 Conn.Super LEXIS 3661 (J.D. of Hartford, at Hartford, December 13, 2004).
In a civil context, our Supreme Court has described wilful, wanton or reckless conduct as that "which takes on the aspect of highly unreasonable conduct, involving an extreme departure from ordinary care . . . It must be more than any mere mistake resulting from inexperience, excitement, or confusion, and more than mere thoughtlessness or inadvertence, or simply inattention . . ." Dubay v. Irish, 207 Conn. 518, 533 (1988); see also Elliott v. Waterbury, 245 Conn. 385, 415 (1998). "Wilful misconduct has been defined as intentional conduct designed to injure for which there is no just cause or excuse." Dubay, supra, at 532-33; see also Markey v. Santangelo, 195 Conn. 76, 78 (1985).
It needs first be said the Revised Judgment of 11/1/01 clearly and unambiguously ordered the defendants to turn over ground lease rents paid by unit owners maintained in escrow accounts to the plaintiffs and it enjoined the defendants from using any of the monies so collected and maintained to be used for any other purpose. That the defendants violated this Order is found true. Whether liable in contempt, however, is predicated upon whether their conduct was wilful, a finding which requires inquiry into the facts and circumstances surrounding the violation. Those facts and circumstances include the following findings hereby made:
1) Section 13 of Article II of the properly enacted By-Laws of the Oaks Condominium (Exh. H) provides the "officers and members of the Board of Directors shall not be liable to the unit owners" (At least one plaintiff — LoRicco — is and has been a unit owner.) for any "mistake of judgment, negligence or otherwise, and shall only be liable for their own individual willful misconduct or bad faith . . . It is intended that [the officers and Board members] shall have no personal liability with respect to any contract made by them on behalf of the Association . . ." Id.
2) The Board had the power to — and did — delegate the responsibility for managing its finances to property management companies (i.e., Group Concepts and Palmer Property Management, Inc.) pursuant to our statutes (C.G.S. §§ 47-80; 47-80a) so long as they did not conflict with the association's by-laws. See e.g., Article I, Section 12; Art. IV, Section 8; Art. IX, Section 1.
3) None of the individual defendants had any current or formal education regarding the management of association finances; none were given any training for the offices they held once elected; none had been taught how properly to read financial statements or summaries and no individual defendant understood such reports or summaries without detailed explanation (never provided by Group Concepts).
4) All of the individual defendants reasonably relied on the property manager to manage the finances of the Association. That duty included the property manager's escrowing of ground rents so as to preserve them for the plaintiffs, the segregation of those funds, and the practice of not using them for payment of operational expenses.
5) With the possible exception of Ms. Newton, none of the other individual defendants had seen or read the Order until this case was brought and none therefore knew the conduct proscribed by the Order.
6) With regard to the use of ground lease rents for payment of the bankruptcy lawyer's retainer fee and for such operational expenses as the repair and painting of the buildings, the defendants — to include Garfi — were either misled by Charmoy into believing he had or would obtain court permission to use the monies in such way (A request of the court to use ground lease rents for taxes was denied; there was no evidence of any other request by Charmoy or any other attorney.) or, because of their ignorance of bankruptcy law to include the fact that only the debtor (the Association) was protected by the filing, wrongfully interpreted that which he advised them regarding the use to which any funds could be put.
7) With regard to the terms and conditions which Farr signed off on and which included the "carve-out" provision which was part of the Settlement and Compromise Agreement (Exh. D), which provision provided the plaintiffs a secured lien in the amount of $84,864.20 as against the Association and to be paid from any proceeds recovered by the Association in a malpractice claim it brought against a former lawyer representing it, Farr had not the authority to do so without advising the others of the terms and without a full understanding of their meaning. That sum included monies here sought — specifically, a total of $31,010.39 paid Charmoy and $53,851.81 of ground lease rents expended for operational needs in violation of the Order of Hodgson, J. Thus, the plaintiffs have preserved their right to receive that amount (The secured claim — with 6% interest — was given first priority among all claims. Exh. D., G-3a).
8) The bankruptcy court's order approving Exh. D (just above referenced) also modified the automatic bankruptcy stay to permit these plaintiffs to "pursue any and all claims and interests available to them in connection with un-remitted ground lease rents against any and all persons other than the Debtor. (Emphasis added) Those are the same amounts here sought. Clearly, the intent then was to bring suit against these defendants — an intent unknown to the defendants until — at the very earliest — the joint Motion to Approve had been ratified and approved by the bankruptcy court; some of the defendants did not learn of the legal significance of this provision until the trial of this motion. Wittingly or unwittingly, the effect of these two provisions was to expose these defendant Board members to liability here notwithstanding that these same Board members (plus Garfi) initiated and pursued bankruptcy protection to preserve the interests of the very unit owners who comprised the Association's membership — four of whom are these individual defendants.
The bankruptcy order also required Stephen Small, as the Association's then attorney and Trustee on certain accounts held in the name of the Oaks, to turn over to these plaintiffs — within fifteen (15) days of the date of the order (January 19, 2005) — the entire balance in two such accounts — an amount "not less than" $717,785.26. A-1, 2 of Order of Approval.
9) The individual defendants — all of whom this court found credible — had not the intent — either singly or in the aggregate — to cause harm to these plaintiffs and lacked comprehension of the legal effect(s) of the Order. Their conduct in not timely disbursing payments to the lessors and in using the lessors' funds for general operating expenses — both violations of the Orders of Hodgson, J. (Exhs. 50 and 48) — was not intended to deprive the lessors of monies rightfully due but was in fact the result of their own inability to process information contained in reports and summaries which combined information presented on a cash accounting basis and an accrual accounting basis without the benefit of explanation and without knowing the significance of the line items contained therein as well as the fact there then existed significant — and very large — outstanding expenses necessarily incurred to safeguard the health, welfare, and safety of unit owners. That they had received letters threatening to shut off utilities underscores the necessity of their need to do all that they could to pay down the water and electrical accounts and to make current insurance payments multiple times what they had been prior to two building fires, elevator problems, fire alarm system problems, and the like. The plaintiffs' response that in fact none of the threatened actions by the creditors occurred is both irrelevant to Board members' duty to unit owners and ignores the obvious — which is that the Board members could not presume such actions would not be taken.
The irony of Attorney LoRicco's testimony he himself — a successful attorney of many years and a successful real estate investor and entrepreneur — could not understand the financial reports provided the Board by Group Concepts and that he believed, these unsophisticated and clearly less well educated Board members were better able to understand them than he was (2/1/06 — A.M., Tr., at 120) cannot be but clear.
10) No one of the individual defendants — or any combination thereof — was capable of purging by paying the amounts here sought. The court is persuaded no additional increase in common fees or further imposition of a special assessment would have been effective given the economic circumstances of the unit owners of these condominiums, the market vale of which was "modest." No evidence was offered to permit a finding that had these Board members imposed such additional fees — as plaintiffs suggest was their duty — sufficient to purge, those fees could have been collected. Nor was there any evidence any one of the four Board Members (sued here individually) owed any amount in ground lease rental payments.
11) Palmer Management Group, Inc. (Sal Garfi) succeeded Group Concepts as property manager at that moment in time when all of the heretofore described financial crises conjoined. He immediately tried to get a copy of the Order but without success (though Mr. LoRicco as a party had the Order or could easily have obtained the same from his attorney); he did not receive the order until Attorney Fisher provided it to him at the end of March or early April of 2003. He early made efforts to learn where the accounts holding ground lease rents were located, but it was not until Attorney LoRicco advised him by letter dated 3/6/03 that he was fully informed of their location. Despite that, he began using all monies from all sources (to include ground lease rents) to bar the wolves from the door so that he might, once having stabilized operating expenses and having persuaded creditors of the Association's intent to become current, address the lessors' legitimate desire to be paid. Asked why he didn't pay the lessors their ground lease fees immediately and every month thereafter, he responded it was "not as pressing as the status of the other financial problems." 9/20/05 — P.M., Tr., at 105. A mistake? Clearly so if the only available viewing lens was the Order, but, in the context of the swirling financial crises facing the unit owners — some elderly, some disabled, many retired and all clinging to the only homes they could call their own, who is to say that judgment call was a more grievous error than making payments to the lessors while ignoring all of the other expenses, bills, and repairs and hoping shutoff day never came? Garfi paid $7,000 in ground lease rents in May of 2003, nothing in June or July (There was no money, he testified. [2/2/06 — P.M., Tr., at 38-39]), and started "catching up" in August when a payment of $19,774 was made (It is believed that was the amount of the check from Group Concepts, the balance remaining in the Oak's account and forwarded to Garfi months later).
Garfi made the first payment no more than two (2) months after he learned of the content of the Order. The court recalls Attorney LoRicco testifying he wouldn't be in court if payments were one (1) or two (2) or perhaps even three (3) months behind. Concededly, making a May 2003, payment did not resolve the shortfall then still existing.
Query why the availability of that money was not earlier known to the Board if in fact the reports and summaries of Group Concepts accurately reflected current status and were understood if fully explained. A dramatic demonstration by Mr. Padro during these hearings demonstrated the inaccuracies of these documents — to the surprise of all parties as well as to the court.
A bigger payment was made in September and, beginning in October of 2003, the payments were went directly, to the attention of the lessors' attorney. In September of 2005, Garfi testified that, in the previous year (under his stewardship), the Association experienced a positive cash flow, the bills were current, a small reserve account of $18,000 existed ("still too low"), and all amounts collected in ground lease rents were paid to the lessors.
12) Attorney LoRicco, one or more of his boys, and at least one other lessor, were unit owners. He testified he or a son attended the majority of Board meetings. The monthly financial reports and summaries were available to them and, thus, they knew what ground lease rents were collected each month and should have been paid. As Attorney LoRicco's earlier referenced letter to the Board established, he knew of all of the expenses incurred, the fires on the premises, and the need for repair to these aging buildings. The Lessors were better able to take meaning from the monthly reports than were the Board members and they had accounting expertise available to them if in fact they, like the board members, could not understand the reports. Yet, they never asked questions at these meetings relative to ground lease rents. Such questions weren't raised in Attorney LoRicco's earlier referenced letter though it did thoroughly list all of the Association's financial difficulties and implied (or stated) the Board was not effectively addressing these problems. Asked at these hearings why he never directly raised the non-payments and/or the shortfall, Attorney LoRicco claimed the lessors were owed, his response was that he felt the Board was better able to ask them (despite knowing they were not asking them) and that he felt, had he asked questions, they would not have been answered. 10/10/06 — A.M., Tr., at 119.
The court does not suggest the lessors' own actions or inactions constitute a defense to this contempt action nor do they in any way alter the inevitable conclusion the Order was seriously violated. It is also not to suggest that the lessors caused their own loss. It is instead to suggest that, given all that the lessors knew of the myriad financial problems of the Association and that which they knew of the Board members given repeated opportunities to observe them, the lessors' silence may well have lulled the Board into believing that to which the members testified — "He (LoRicco) knew we couldn't pay him." Part of the mosaic of facts and circumstances appropriately considered by this court is that the lessors (Three of them have been trained in the law.) had frequent opportunities — and early — to show the Board members the Order most testified to never having seen before the hearings on this motion, to explain the ways in which the Board had violated the Order and the remedies available to the plaintiffs for such violation, and even to work with the Board and with Garfi to arrive at a solution that might have avoided the time-consuming and costly litigation here.
Though Group Concepts was sued and the plaintiffs have served them with the Order to Show Cause which initiated these proceedings and notice of the first hearing date, the pleadings remain open as to them and the court is not persuaded they are properly before her. Though the plaintiffs filed a default motion as to them, it was never claimed or decided. Nor is it known that they continue to do business. Melissa Saville testified but no questions were asked of her regarding the company's current status (She is no longer employed by them.) or her intent. Nor was any argument here advanced that Group Concepts was liable under an agency theory. Ultimately, these questions are irrelevant. Melissa Saville, as the Association's property manager while employed by that company, performed less than competently or professionally vis-a-vis this Board's delegation of the management of the unit owners' finances and specifically with regard to the Order — which she in fact had. That she (or Group Concepts) was negligent is all that was established as to this defendant as well as to the others.
Having carefully examined all of the testimony and exhibits, having evaluated the credibility and observed the demeanor of all of the witnesses over many days of hearings, having read all of the briefs and heard the argument of counsel and the pro se parties, and having considered all of the facts and circumstances surrounding the defendants' violation of Judge Hodgson's Order, the court concludes the defendants' actions were both ill-informed and neglectful but lacked the requisite wilfulness to find them in contempt. The motion is denied as to all defendants.
The court is reminded of the Supreme Court's reference to the plaintiffs' claim the defendants before them (primarily, the Association) "had been negligent in the collection of amounts due from the unit owners." (Emphasis added.) 265 Conn. 579, 620 (2003). The plaintiffs correctly so stated in their complaint — and the Supreme Court so found in affirming the trial court.
Having denied the instant motion, this Court has not the authority to enter further Orders. It is, however, appropriate to remind the defendants of their ongoing obligations and the shortfall vis-a-vis ground lease payments. It will no longer be possible for them to claim lack of knowledge. Mr. Garfi has suggested a plan for addressing the shortfall and the current Board is going to have to deal with that issue immediately.