Opinion
No. CV 08-5024457-S
October 14, 2010
MEMORANDUM OF DECISION
On November 7, 2008, the plaintiff, Fremont Riverview, LLC, initiated this breach of contract action against the defendant, the State of Connecticut, based on the failure of the defendant to make certain payments of additional rent pursuant to a lease between the parties. A trial was held to the court on April 13, 2010. At trial, the parties submitted numerous exhibits consisting of a lease, lease modifications, documents relating to real estate tax increase notices from the Town of East Hartford and correspondence between the parties. The court heard testimony from four witnesses.
The court notes that all of the plaintiff's exhibits were entered as full exhibits with no objection by counsel for the defendant. All of the defendant's exhibits were entered into evidence as full exhibits with no objection by counsel for the plaintiff except for Q and R which were marked for identification only.
The witnesses were Jonathan Keller, the manager and principal owner of Fremont, Joseph Sposito, executive vice president and chief financial officer of Fremont; Susan Amenta, now retired property management supervisor for the department of public works; and Shane Mallory, administrator of leasing and property transfer for department of public works. The first two witnesses were called by the plaintiff. The latter two were called by the defendant.
I FINDINGS OF FACT
Based on the testimony and exhibits presented in evidence, the court finds the following facts. Other facts are found throughout the memorandum as necessary for the discussion at hand. The plaintiff lessor owns property at 99-101 East River Drive, East Hartford, which includes a two-building complex known as Riverview Square (the premises). On June 30, 2000, the plaintiff and the state, the lessee, acting through the department of public works, entered into a lease agreement by which the state leased a significant portion of office space on the premises from the plaintiff for a ten-year term. (Plaintiff's Exhibit 1; Defendant's Exhibit A.) The parties entered into two subsequent agreements which modified and amended the lease on November 15, 2000 (first lease modification), and October 24, 2003 (second lease modification). (Plaintiff's Exhibit 1; Defendant's Exhibits C, D.) The divisions of the state that primarily occupy the premises are the Department of Information Technology and the Judicial Branch.
The lease provides that in addition to paying the plaintiff a monthly base rent, the state is also obligated to pay "supplemental rent," "additional rent," and certain other expenses. Central to the parties' dispute is the payment of real property taxes on the premises by the parties. Section 7 of the lease provides that the plaintiff shall pay for "base real estate taxes," but Section 27 of the lease provides that the state shall pay for sixty percent of real property tax increases. Specifically, Section 27 of the lease provides, in relevant part, that the state "shall pay as additional rent sixty percent (60%) of any real property tax increases on the property . . . during the term of occupancy . . ." (Plaintiff's Exhibit 1; Defendant's Exhibit A.) Section 27, subsection (a) provides that "such real property tax increases are above the taxes levied on such property on the City/Town of East Hartford's Grand List of October 1, 1999." The first lease modification changed the "base tax year" from the October 1, 2000 grand list.
Of particular importance to the resolution of this dispute is subsection (f) of Section 27, which provides, in relevant part: "The LESSEE shall be relieved of all liability for increased taxes based on any revaluation of the subject premises by the municipality unless the LESSOR gives written notice by certified mail to the Department of Public Works commissioner within thirty (30) days of notice to the LESSOR by the municipality of the revaluation so as to permit the LESSEE to contest such revaluation if the commissioner determines it to be appropriate . . . Following payment by the LESSOR of any tax for which the LESSOR is entitled to a reimbursement as hereinbefore provided, the LESSOR must present a copy of the receipted tax bill to the Department of Public Works commissioner no later than ninety (90) days after the due date for the payment of the last installment of the tax, in order to be entitled to reimbursement. The LESSOR'S failure to apply for reimbursement within the time herein specified shall terminate any responsibility of the LESSEE to make reimbursement."
East Hartford bases its calculation of real property taxes owed by a property owner in a particular year on that year's grand list, which is generated on October 1 of each year. East Hartford bills the property owner for the real property tax owed for that year in the following year. That real property tax bill is payable in two installments, one due on July 1 of that following year, and one due on January 1 of the next year. For example, the plaintiff's real property tax bill for 2001 was based on the October 1, 2001 grand list, and for a total amount of $285,756.54. (Plaintiff's Exhibit 2.) That tax was payable in two equal installments of $142,878.27, one due on July 1, 2002, and the other on January 1, 2003.
In a letter from the East Hartford Office of the Assessor, dated February 15, 2002, the plaintiff, through its management company at the time, Prestige Management, LLC (Prestige), was notified that there had been a new assessment of the premises as of October 1, 2001 pursuant to a revaluation. (Plaintiff's Exhibit 8; Defendant's Exhibit E.) The letter states that the new assessment represents "the change in value from the last revaluation which was completed in 1993." The letter also states that informal hearings could be scheduled, by appointment, to review the new property value, and that such appointments should be made within 10 days after receipt of the notice. It further provides: "If a property owner is not satisfied with the results of the informal hearings, an appeal may be made to the Board of Assessment Appeals . . . Applications will be available in the Assessor's Office beginning February 1, 2002, and must be returned by March 20, 2002."
Jonathan Keller, manager and principal owner of the plaintiff, testified that the plaintiff's procedure or practice in place in 2000 through 2002, in regard to the receipt of notices of revaluation of the properties it owned, was to review them internally and then to have Prestige send copies to the plaintiff's tenants. (Transcript, 4/13/10, pp. 15, 44.) Keller also testified that although it was Prestige's practice to make a copy of such notices and keep that copy in the tenant's file, he could not provide such a copy or other proof that the notice was sent to the state pursuant to Section 27(f) of the lease, but that he had no reason to doubt that it occurred. (Transcript, 4/13/10, pp. 15-16.) Keller did recall personally reviewing the assessment, concluding that the assessment was "quite reasonable," and having no reason to pursue a tax appeal, although the plaintiff has pursued tax appeals "many times" before. (Transcript, 4/13/10, p. 16.)
In 2003, as is further discussed hereinafter, and pursuant to Section 27 of the lease, the plaintiff began billing the state for real property tax increases: (1) based on the 2001 assessment of the value of the premises pursuant to the 2001 revaluation; and (2) over the base tax year, 2000. The invoices that the plaintiff sent to the state all had a similar format. From 2003 to 2004, these invoices stated that they were for "property tax reimbursement reconciliation." (Plaintiff's Exhibits 2, 9, 12, 13.) Under that heading was a line titled "actual expenses," followed by the applicable grand list on which the bill was based, and then in parentheses, two dates indicating a period of time. After several different calculations for the purpose of arriving at the increased taxes owed, over the base year, to the plaintiff by the state, a final amount due was stated. Beginning in 2005, these invoices had a slightly different format, stating that they were for "property tax installment due" and then, without stating the applicable grand list, an applicable period of time. (Plaintiff's Exhibits 14, 15, 16, 19, 20, 21.)
There is some ambiguity as to what the time periods in the invoices indicate, and the meaning of those dates is relevant to certain arguments by the parties. The evidence shows that the dates included in the invoices, six-month periods except for the very first invoice which had a twelve-month period, reference the period of time in which certain installments were due to be paid to East Hartford by the plaintiff. Those dates do not make reference to the tax year for which the amount the plaintiff is billing the state is applicable. For example, an invoice dated July 24, 2003, from the plaintiff to the state, states that it is based on grand list 2002, and in parentheses, states the time period "07/01/03-12/31/03." (Plaintiff's Exhibit 11.) This invoice indicates that the plaintiff, on July 24, 2003, billed the state for the tax installment it paid within the six-month period of July 1, 2003 to December 31, 2003, which installment would have been the first installment due, on July 1, 2003, for the 2002 calendar year.
The plaintiff first billed the state for increased taxes over the 2000 base year, and based the 2001 assessment of the premises in an invoice, dated March 26, 2003. (Plaintiff's Exhibit 2, 9.) The invoice states that it was for "grand list 2001" and includes a twelve-month date range, July 1, 2002 to June 30, 2003. The total bill in that invoice is $65,291.10. Based on the evidence, it is clear that this invoice was for payment of increased taxes based on the two tax bill installments paid by the plaintiff for the 2001 calendar year. Under East Hartford's real property tax billing procedures, those installments would have been due on July 1, 2002 and January 1, 2003.
In response to receipt of the invoice, Susan P. Amenta, a property management supervisor at the Department of Public Works, wrote a letter, dated April 10, 2003, to the plaintiff, requesting the plaintiff to comply with the requirements of Section 27 of the lease by providing certain documentary information. (Plaintiff's Exhibit 3; Defendant's Exhibit F.) Joseph J. Sposito, executive vice president and chief financial officer of the plaintiff, responded in a letter dated April 14, 2003, enclosing several documents relevant to Amenta's requests. (Plaintiff's Exhibit 4.) Amenta replied to Sposito in a letter dated April 23, 2003, requesting one further piece of documentation, a note from the East Hartford Tax Assessor. (Plaintiff's Exhibit 5; Defendant's Exhibit G.) Sposito faxed a letter from Richard Buchanan, the East Hartford assessor, to Amenta, on April 30, 2003. (Plaintiff's Exhibit 6; Defendant's Exhibit H.) Thereafter, the State Comptroller issued a check, dated May 22, 2003, to the plaintiff for $65,291.10. (Plaintiff's Exhibit 10.) The state stipulated at trial that this amount was paid.
Thereafter, the plaintiff billed the state for the increased tax over the 2000 base year, and based on the 2001 assessment, biannually. In that regard, the plaintiff billed the defendant a second time for taxes owed in the invoice dated July 24, 2003, as noted in the example above, for the period of July 1, 2003 through December 31, 2003, and in the amount of $35,905.39. (Plaintiff's Exhibit 11.) In a letter dated August 20, 2003, Amenta requested that an employee of the Department of Information Technology, Frank Arute, reimburse the plaintiff for that amount. (Plaintiff's Exhibit 11.) The state stipulated at trial that this amount was paid.
Comparison of the testimonial and documentary evidence presented at trial creates some confusion as to how many payments were made to the plaintiff by the state. Keller testified that he believed three "payments" were made by the state, while Amenta and Sposito each testified that the state paid three "installments." The documentary evidence indicates that only two payments were made by the state, those that it stipulated to at trial. (See Plaintiff's Exhibits 17, 19, 20, 21, 22, 23; Defendant's Exhibits K, N.) The court clarifies that the evidence shows that the state made two payments to the plaintiff, regarding three property tax installments the plaintiff paid to East Hartford: Two for its 2001 calendar year bill, and one for the first installment of its 2002 calendar year bill.
In an invoice dated January 22, 2004, the plaintiff billed the defendant a third time for the increased tax owed, this time for the period of January 1, 2004 through June 30, 2004, in the amount of $35,905.53. (Plaintiff's Exhibit 12.) That time period represents the time in which the plaintiff would have paid its second tax bill installment for the 2002 calendar year.
The plaintiff billed the defendant for the increased taxes a fourth time in an invoice dated July 7, 2004. (Plaintiff's Exhibit 13.) That invoice contains calculations related to the increased taxes paid for two periods: January 1, 2004 through June 30, 2004, as had been previously billed in the January 22, 2004 invoice, and for July 1, 2004 through December 31, 2004. The latter set of dates would have been the period of time in which the plaintiff paid its first tax bill installment for the 2003 calendar year. The total bill was for $79,867.54.
Evidence presented at trial showed that in response to this invoice, the state raised an issue of whether the plaintiff had sent notice of the 2001 revaluation to the state in accordance with Section 27(f) of the lease. In a letter dated August 25, 2004, Shane P. Mallory, an administrator at the Department of Public Works, wrote Keller to express several concerns based on the terms of the lease. (Defendant's Exhibit I.)
First, the letter states that notification of the 2001 revaluation was not received from the plaintiff until April 28, 2003, when the plaintiff forwarded the Buchanan letter written to Sposito, stating that "the increase in assessment for the property located at 99-101 East River Drive was a result of the 2001 Revaluation." Second, the letter expresses concern with the inclusion in the July 7, 2004 invoice of the increased taxes related to the second tax bill installment for the 2002 calendar year, as well as the inclusion of taxes on certain related properties. Third, the letter states that the bill for the second tax bill installment for the 2002 calendar year was in violation of the ninety-day requirement of Section 27(f). The letter concludes that the Department of Public Works was forwarding the matter to its legal counsel.
April 28, 2003 was the date of the letter from Buchanan to Sposito. The parties agree that the letter was not faxed by the plaintiff to the state until April 30, 2003. (See Plaintiff's Exhibit 6; Defendant's Exhibit H.)
The language of the letter actually reads "Section, paragraph 11," but it is clear from the inclusion of a quote of the lease language, although the quote is erroneous in several respects, that the letter intended to reference Section 27(f).
Thereafter, the state did not agree to make any further payments in response to invoices from the plaintiff for the increased taxes based on the 2001 assessment until May 7, 2008, although the plaintiff continued to create and presumably send such invoices. (Plaintiff's Exhibits 14, 15, 16, 19, 20, 22; Defendant's Exhibit N.)
Mallory wrote another letter to Keller, dated September 9, 2004, stating that the state was unable to reimburse the plaintiff for increased taxes because it had not received notice of the 2001 revaluation until April 30, 2003, in violation of Section 27(f) of the lease, and that the state had improperly made a reimbursement related to the first installment owed for the 2002 calendar year. (Defendant's Exhibit J.)
Mallory wrote a third letter to Keller, dated June 6, 2006, in which he reiterated the state's position according to the September 9, 2004 letter and also stated that the department of public works was "offsetting" the amount it was due from the plaintiff because of its improper reimbursement of the first installment owed for the 2002 calendar year against an amount it independently calculated it actually owed for increased taxes. (Plaintiff's Exhibit 13; Defendant's Exhibit K.) A spreadsheet attached to the letter states that while the lessor's property tax installments were based on a "2004 assessment," the state's calculations were based on a "2000 assessment per lease agreement."
In a letter from the East Hartford Office of the Assessor, dated January 9, 2007, to Fremont Riverview LLC, in care of Fremont Management, LLC, the plaintiff was notified that there had been a new assessment of the premises as of October 1, 2006, pursuant to a revaluation. (Plaintiff's Exhibit 18; Defendant's Exhibit L.) This letter is very similar to the February 15, 2002 letter. In a letter dated January 24, 2007 to the Department of Public Works, Sposito enclosed the notice of the 2006 revaluation from the Town of East Hartford, and noted that it was received by the plaintiff on January 23, 2007. (Plaintiff's Exhibit 18; Defendant's Exhibit L.) A deputy commissioner of the Department of Public Works acknowledged receipt of Sposito's letter in another letter dated February 5, 2007. (Plaintiff's Exhibit 18; Defendant's Exhibit M.) Thereafter, in a letter from Mallory to Keller, dated May 7, 2008, the Department of Public Works acknowledged that it was required to pay the increased taxes in accordance with the 2006 assessment, beginning with an invoice from the plaintiff for the time period of July 1, 2007 to December 31, 2007, which would have been the period of time in which the plaintiff paid its first tax bill installment for the 2006 calendar year. (Plaintiff's Exhibit 22; Defendant's Exhibit N.)
Keller testified that, at some time, the plaintiff assumed the management responsibilities of its properties through an entity named Fremont Management, which replaced Prestige. (See Transcript, 4/13/10, p. 42.)
Mallory's letter, however, put some qualifications on the state's agreement to pay the plaintiff. First, the letter states that the department was making three credits to the plaintiff's account: (1) $149,055.16 to fulfill the state's obligation to pay the plaintiff's invoices regarding the first and second installments of the 2006 calendar year; (2) $711.58 for the first installment of the 2002 calendar year; and (3) $40,110.86 for the first and second installments of the 2005 calendar year. (Plaintiff's Exhibit 22; Defendant's Exhibit N.)
A spreadsheet attached to Mallory's letter states that the latter two credits were the result of calculations "based upon the base year 2000 and landlord's proper 90 days notice." Mallory testified at trial that the Department of Public Works did not credit the plaintiff's account for installments for which the state did not receive what it considered, according to its interpretation of the provisions of the lease, "timely" notice within ninety days for receipt of a tax bill that's paid by the plaintiff. (Transcript, 4/13/10, pp. 100-01.)
As to the last credit, the letter explains that this calculation is based on the year 2000 assessment, rather than the 2001 assessment, for which the plaintiff had billed the state for payments of $45,185.63 and $50,020.04. (Plaintiff's Exhibit 14, 15.)
Second, Mallory's letter states that "the DPW improperly reimbursed Fremont in the amount of $101,196.49 for the first and second installments of the year 2002 tax increases. The DPW is offsetting any amount claimed due Fremont by $101,196.49." As a result of the state's "offsetting," or subtracting, these "improper" payments from its credits above, the letter states that Mallory had authorized the department of information technology to issue a check in the amount of $88,681.11. (Plaintiff's Exhibit 22; Defendant's Exhibit N.) In another letter, also dated May 7, 2008, Mallory directs Arute to pay the plaintiff $88,681.11. (Plaintiff's Exhibit 22; Defendant's Exhibit N.) A letter from the plaintiff to the Department of Public Works, dated August 7, 2009, supports the fact that this amount was received by the plaintiff. (Plaintiff's Exhibit 23.)
While it is clear that the amount of $101,196.49 is the total amount that the state has stipulated to have paid the plaintiff, it is unclear how Mallory could have arrived at the conclusion that they were for the "year 2002 tax increases." The evidence shows that those payments were made for three installments: Both installments of the 2001 calendar year and only the first installment of the 2002 calendar year.
As a result of the foregoing, as Keller and Sposito each testified, and the documentary evidence shows, the plaintiff contends that it is still owed for increased taxes during the time period spanning January 1, 2004 to June 30, 2008, or the second tax bill installment of the 2002 calendar year through the second tax bill installment of the 2006 calendar year, for a total amount of $406,806.86. (Transcript, 4/13/10, pp. 31, 64; Plaintiff's Exhibit 23.) The plaintiff also seeks prejudgment interest on that amount. As of the six-month period in which the plaintiff would have paid its first tax bill installment of the 2007 calendar year, July 1, 2008 through December 31, 2008, the plaintiff's records show that the department of public works has been making regular payments regarding tax increases based on the 2006 assessment. (See Plaintiff's Exhibit 23.)
Although the plaintiff's records show receipt of $88,681.11 towards the allegedly past due bills for tax increases, as previously discussed, that payment was made in response to an invoice regarding both installments of the 2006 calendar year, and because that amount did not fully satisfy the amount in the plaintiff's invoice, it cannot be said that the plaintiff would agree that either installment period has been fully satisfied. (Plaintiff's Exhibit 23.)
II THE CLAIMS OF THE PARTIES
The plaintiff seeks an award of monetary damages in the amount of $406,806.86 plus prejudgment interest, for the "additional rent" it claims it is owed under Section 27 of its lease with the state for real property tax increases on the premises. The state argues that it is not liable for those payments for two reasons: (1) Pursuant to Section 27(f) of the lease, the state is relieved of its obligation to pay the plaintiff for those real property tax increases that are based on the 2001 assessment of the premises because the plaintiff failed to give the state notice of the 2001 revaluation of the premises as required by Section 27(f) and mandated by General Statutes § 4b-26(c); and (2) the state is not liable for real property tax increases during certain periods of time because the plaintiff failed to forward receipted tax bills to the commissioner of the Department of Public Works within ninety days after the due date for the payment of the last installment of the tax as required by Section 27(f) of the lease.
The plaintiff responds to the defendants' arguments by contending that: (1) There is evidence that the plaintiff sent, and the state received notice of the 2001 revaluation of the premises; (2) even if the court determines that the plaintiff has not proved that notice was sent, that failure does not bar recovery because, (a) the state was aware of the provisions of Section 27(f), and, by subsequently approving payment and making payments pursuant to requests for payment of tax increases, it has waived its ability to avoid the obligations of Section 27, and (b) the state was not prejudiced by the failure to send notice as to the filing of a tax appeal; (3) the plaintiff complied with the ninety-day requirement of Section 27(f) of the lease; and (4) the state has admitted that it is legally obligated to pay the additional rent sought and has set aside funds with which to do so.
A. Legal Principles
The plaintiff's claims present "a question of contract interpretation because a lease is a contract, and, therefore, it is subject to the same rules of construction as other contracts." (Internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Co., 294 Conn. 611, 622, 987 A.2d 1009 (2010). "[A] contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Internal quotation marks omitted.) PSE Consulting, Inc. v. Frank Mercede Sons, Inc., 267 Conn. 279, 290, 838 A.2d 135 (2004).
"A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a [written instrument] must emanate from the language used in the [writing] rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Co., supra, 294 Conn. 623.
B 1. Whether Notice of the 2001 Revaluation was Sent
The parties implicitly agree that Section 27(f) of the lease, as provided above, operates to relieve the state of its liability to the plaintiff for increased taxes based on a revaluation of the premises by East Hartford unless the plaintiff gives written notice by certified mail to the Department of Public Works commissioner within thirty days of notice of the revaluation received by the plaintiff. Their dispute is whether, for a variety of reasons, Section 27 ever in fact operated to relieve the state of its liability to the plaintiff for increased taxes following East Hartford's 2001 revaluation of the premises so that the state is not liable for tax increase payments to which the plaintiff claims to be entitled.
As argued in the plaintiff's post-trial memorandum of law, the plaintiff "acknowledges that there is no direct or documentary evidence that a notice of revaluation was sent to or received by the state in early 2002, [but] there is nonetheless circumstantial evidence that the plaintiff did, in fact, send such notice to the state at that time." (Plaintiff's Post-Trial Memorandum, p. 16.) The plaintiff further argues that because there was testimony that it was the plaintiff's normal course of business to send notices of increases in taxes to its tenants, that this court can conclude that the notice in question was sent to the state.
The state responds in its post-trial memorandum that because the plaintiff, at trial, did not produce any documentation indicating that the plaintiff sent a notice by certified mail, as required by Section 27 of the lease, or "enter into evidence any description of its normal course of business for sending certified mail," the plaintiff has failed to prove, by a preponderance of the evidence, that notice was sent. (Defendant's Post-Trial Memorandum, p. 15.) Further, the state argues that it has rebutted the plaintiff's claim that notice was sent by eliciting testimony that it was the state's normal course of business to keep such notices in a property's file, and that the file regarding the premises did not contain any such notice.
"Testimony as to the habit or practice of doing a certain thing in a certain way is evidence of what actually occurred under similar circumstances or conditions. Montinieri v. Southern New England Telephone Co., 175 Conn. 337, 348, 398 A.2d 1180 (1978); Caslowitz v. Roosevelt Mills, Inc., 138 Conn. 121, 125, 82 A.2d 808 (1951); see also 1 B. Holden J. Daly, Connecticut Evidence (2d Ed. 1988), § 72a. `Evidence of a regular practice permits an inference that the practice was followed on a given occasion.' Puro v. Henry, 188 Conn. 301, 312, 449 A.2d 176 (1982)." State v. Hubbard, 32 Conn.App. 178, 185, 628 A.2d 626, cert. denied, 228 Conn. 902, 634 A.2d 296 (1993).
The circumstantial evidence on which the plaintiff relies is testimony by Keller that from 2000 to 2002, it was Fremont's practice, with regard to notices of revaluation it received from municipalities, and in connection with properties it manages, to review the notices internally "and then to send them to [the plaintiff's] tenants at that point, or shortly thereafter." (Transcript, 4/13/10, p. 15.) Keller then testified that although he could not provide any documentary proof that the February 15, 2002 letter that the plaintiff received from the East Hartford Office of the Assessor was actually sent to the state within thirty days of its receipt, based on the plaintiff's practice and procedure, he had no reason to doubt that notice of the new assessment was sent to the state. (Transcript, 4/13/10, pp. 15-16.) Keller later testified, during cross-examination, that the above practice was actually the plaintiff's management company's practice, which, in 2002, was Prestige. (Transcript, 4/13/10, p. 44.) He also testified, on redirect, that in 2003, the procedure for Fremont Management to provide notice revaluation to tenants would be to "send both notice of and assessment to the tenants," and that the same procedure was previously utilized by Prestige. (Transcript, 4/13/10, pp. 52-53.)
Keller testified that he was the principal owner of both the plaintiff, Fremont Riverview, LLC, and another entity, Fremont Management, which, at some point in time, began managing Fremont Riverview, LLC's properties. (Transcript, 4/13/10, pp. 10-11, 42.) At trial, the plaintiff's counsel asked questions on more than one occasion about "Fremont," which raises some question as to whether certain answers were in reference to the plaintiff or Fremont Management. At trial it was clear that these two entities were closely related, and therefore, except where otherwise noted, this court treats these two entities as the same.
During cross-examination, Keller testified that Prestige's practice described above was a "general business practice, not out of a manual or anything." (Transcript, 4/13/10, p. 44.) He further testified that it is a general business practice of Fremont to keep a copy of the February 12, 2002 revaluation notice received from East Hartford "in the file." (Transcript, 4/13/10, p. 44.) He did not know who from Fremont would have mailed notice to the state. (Transcript, 4/13/10, pp. 46-47.) Keller also testified that it was "the practice" when sending out the notice of revaluation in February of 2002 to the state to make a copy of that notice and put it in the file, but that there was no copy of that notice in the file. (Transcript, 4/13/10, p. 47.) That business practice was followed with regard to the January 9, 2007 letter from East Hartford in that a copy of the February 24, 2007 notice to the state was put in the file. (Transcript, 4/13/10, p. 48.) On redirect, Keller testified that he was "sure" that the form of the notice that would have been sent to the state would have been a copy of the February 15, 2002 letter received from East Hartford. (Transcript, 4/13/10, p. 51.)
It is unclear what file this testimony references. The court hypothesizes that the term "the file" could reference a company-wide file for all the property Fremont owns, a building-wide file specific to the premises, or tenant-specific files for each tenant of a particular property, but cannot determine whether it is or is not any one of those.
The court recognizes that under certain circumstances, evidence that an individual or entity follows a normal course of business can provide circumstantial evidence that it was followed on a particular occasion. See State v. Hubbard, supra, 32 Conn.App. 185. But the court is not persuaded that the plaintiff followed its normal course of business here.
First, while Keller testified that it was the plaintiff's practice, via Prestige and later through Fremont Management, to send notices of revaluation to tenants, the plaintiff offered no evidence other than Keller's testimony to demonstrate conformity with that practice. There was no evidence that the plaintiff followed such practice in regard to other tenants, or that other leases even included similar notice provisions.
Second, it is unclear exactly what the plaintiff's practice was. While Keller testified that he was "sure" that the form of the notice sent to the state would have been one document, a copy of the February 15, 2002 letter, he also testified that it was Prestige's practice to "send both notice of and assessment to the tenants." (Transcript, 4/13/10, pp. 52-53.) This testimony implies that at least two documents would have been sent in order to provide notice to the state. That two documents would have been sent is supported by the plaintiff's production of a February 24, 2007 letter to the state which, when sent to the state along with a copy of a January 9, 2007 notice of revaluation received from East Hartford, notified the state of a new assessment in 2006. (Plaintiff's Exhibit 18.) The plaintiff was able to produce these documents because, as Keller testified, it was the plaintiff's practice to put copies of these documents in "the file" before they were sent.
Third, the plaintiff argues that the circumstantial inference this court should make from the foregoing evidence is that a similar letter and copy of the February 15, 2002 letter from East Hartford was sent to the state in 2002. The making of such an inference is supported by the Supreme Court's statement in State v. Hubbard, that "[e]vidence of a regular practice permits an inference that the practice was followed on a given occasion." State v. Hubbard, supra, 32 Conn.App. 185. But immediately prior to stating that principle, the court in Hubbard also noted that "[t]estimony as to the habit or practice of doing a certain thing in a certain way is evidence of what actually occurred under similar circumstances or conditions." Id. These two principles are not necessarily the same. The latter principle indicates that testimony of a habit or practice can be evidence of what actually occurred. Id. But what actually occurred could logically be either that the practice was followed on a given occasion, or that the practice was not followed on a given occasion. See Caslowitz v. Roosevelt Mills, Inc., supra, 138 Conn. 122-26.
In Caslowitz, the plaintiff alleged the sale and delivery of three cases of yarn to the defendant, via a third party at the defendant's direction. Caslowitz v. Roosevelt Mills, Inc., supra, 138 Conn. 122. The defendant denied that the three cases were ever received. Id. At trial, the plaintiff introduced a delivery receipt purportedly signed by the receiving clerk of the third party to prove the delivery of the three cases. Id., 125. The defendant produced one of its officers to testify as to a practice between the defendant and the third party with respect to acknowledging shipments received by the third party for the defendant's account. Id. The witness was permitted to testify that there was such a practice, but was not permitted to describe it. Id. On appeal, the Supreme Court stated that "in the present case the testimony was admissible to lay the foundation for the drawing of an inference that the three cases had not been delivered from the failure of the defendant to receive any notice from the [third party] . . . The evidence of the established practice between the two companies concerning the manner in which goods received by the [third party] for the account of the defendant were handled and billed was designed to show that there was an error in the giving of the receipt and that the receipt therefore could not be accepted as positive proof that the goods were actually delivered. The court erred in excluding this testimony." (Citations omitted.) Id., 125-26.
That the evidence shows that it was the plaintiff's practice to place a copy of the revaluation letter received from East Hartford as well as a letter to the state giving it notice of the revaluation in "the file" before it was sent, and that such file does not contain any letter to the state in 2002, implies that no such letter, nor a copy of the East Hartford revaluation letter, was sent to the state.
Fourth, Amenta testified that when she or her property agents received notices of revaluation at the Department of Public Works, they would put those notices in "the file," and the file did not contain any notice of revaluation received from the plaintiff in 2002. (Transcript, 4/13/10, pp. 74, 78.) Given this testimony, then, the court is presented with two similar business practices. Keller testified that it was the plaintiff's practice to keep copies of notice documents that it sent in the plaintiff's "file," and Amenta testified that it was the state's practice to keep copies of notice documents received in the state's "file." Both testified that the respective party's files contain no such record of any notice documents sent or received in 2002. Both testified that the respective party's files do contain notice documents sent or received in 2007. The court finds both witnesses credible. The only logical conclusion resulting from this testimony based on the business practices of the parties is that the plaintiff, in 2002, did not send notice of East Hartford's 2001 revaluation of the premises. At the very least, the court is unable to determine that the plaintiff either did or did not send notice.
See footnote 8.
Based on the foregoing, the court concludes that the plaintiff has failed to prove, by a preponderance of the evidence, that it sent notice of the Town of East Hartford's 2001 revaluation of the premises to the state in 2002.
2. Whether the State Waived the Condition that it Receive Notice of the 2001 Revaluation
The plaintiff argues in the alternative that because: (1) The state demanded proof of compliance with various conditions in the lease for payment in response to the plaintiff's first invoice for payment regarding increased taxes, but did not raise the issue of the non-occurrence of the condition that the plaintiff provide notice of the revaluation; and (2) the state paid three tax increase installments in response to the plaintiff's invoices for those payments; the state has waived its ability to avoid its obligation to make payment for the tax increases because of any failure on the part of the plaintiff to send notice of revaluation within thirty days of its receipt of the notice of the new assessment from the Town of East Hartford.
The state responds that the court cannot conclude that the payments made by the state waived the provisions of § 4b-26© or Section 27(f) of the lease because (a) the commissioner of the department of public works and his employees cannot waive obligations imposed by law; and (b) there was no knowing waiver by the state.
"The general rule is that a party for whose benefit a provision in a contract is intended may waive his rights under such provision." Lanna v. Greene, 175 Conn. 453, 458, 399 A.2d 837 (1998). "Waiver is the intentional relinquishment or abandonment of a known right or privilege . . . [V]arious statutory and contract rights may be waived . . . Waiver is based upon a species of the principle of estoppel and where applicable it will be enforced as the estoppel would be enforced . . . Estoppel has its roots in equity and stems from the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . ." (Citations omitted; internal quotation marks omitted.) C.R. Klewin Northeast, LLC v. Bridgeport, 282 Conn. 54, 87, 919 A.2d 1002 (2007).
"To constitute waiver there must be both knowledge of the existence of the right and intention to relinquish it . . . Waiver involves the idea of assent, and assent is an act of understanding. This presupposes that the person to be affected has knowledge of his rights, but does not wish to assert them. Intention to relinquish must appear . . . [W]here one lacks knowledge of a right, there is no basis upon which a waiver of it can rest . . . Waiver does not have to be express, but may consist of acts or conduct from which waiver may be implied . . . In other words, waiver may be inferred from the circumstances if it is reasonable so to do." (Citations omitted; emphasis in original; internal quotation marks omitted.) Novella v. Hartford Accidental Indemnity Co., 163 Conn. 552, 562, 316 A.2d 394 (1972). "The rule is applicable that no one shall be permitted to deny that he intended the natural consequences of his acts and conduct." (Internal quotation marks omitted.) Gagne v. Vaccaro, 80 Conn.App. 436, 445, 835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846 A.2d 881 (2004).
"The issue of waiver is a question of fact, dependent on all of the surrounding circumstances and the testimony of the parties." Roy v. Metropolitan Property Casualty Ins. Co., 98 Conn.App. 528, 532, 909 A.2d 980 (2006).
The state first argues that it did not waive its release from liability for increased taxes under the lease because the Commissioner of the Department of Public Works and his employees cannot waive obligations imposed by law. In support of that argument, the state cites two Connecticut cases: State v. Metrusky, 140 Conn. 26, 97 A.2d 574 (1953) and Holbrook v. Karta Container Recycling, Inc., Superior Court, Docket No. CV 97 0573225 (July 2, 1998, Wagner, J.).
In Holbrook, the plaintiff, the Commissioner of Environmental Protection, alleged that the defendants, two waste disposal companies, improperly dumped and disposed of substances containing asbestos in violation of General Statutes § 22a-252. Holbrook v. Karta Container Recycling, Inc., Superior Court, Docket No. CV 97 0573225 (July 2, 1998, Wagner, J.). The defendants filed separate answers and special defenses. Id. One defendant, Karta Container Recycling, Inc. (Karta) filed three special defenses: failure to join necessary parties, equitable estoppel and waiver. Id. The other defendant, Industrial Recycling System, Inc. (Industrial), filed three special defenses, but withdrew all but one alleging equitable estoppel. Id. At issue was the plaintiff's motion to strike all four remaining special defenses. Id.
First, the court granted the motion to strike as to Karta's special defense alleging failure to join necessary parties. Id. Second, it granted the motion to strike as to Karta's second and third special defenses alleging estoppel and waiver, stating: "Karta has failed to allege any conduct by the plaintiff or its agents that would support its claims of estoppel and waiver, and its special defenses merely recite conclusions of law." Id.
Third, the court granted the motion to strike as to Industrial's third special defense grounded on equitable estoppel. In doing so, as quoted by the state in the present case, the court concluded that: "Construing the facts in the pleadings most favorably to the defendant, no allegations support the proposition that the plaintiff should be estopped from asserting its rights against Industrial. Even a commissioner of a state agency `has no authority to waive an obligation so imposed by law, and consequently the state cannot be estopped from enforcing it by any conduct on his part.' State v. Metrusky, 140 Conn. 26, 30, 97 A.2d 574 (1953). Thus, no DEP employee had the authority to grant permission to deliver materials containing unlawful amounts of asbestos to the Q-Park Landfill in violation of General Statutes § 22a-252 which contains specific prohibitions of such conduct. [ Id.] State agents acting outside the scope of their authority cannot waive the rights of the State, nor can they estop the State from asserting its rights." (Internal quotation marks omitted.) Id.
In Metrusky, the state sought reimbursement from the estate of Veronica Sarafin for the expense for supporting her son in a state-maintained institution for the care of the mentally ill. State v. Metrusky, supra, 140 Conn. 27. From 1932 to 1945, Sarafin paid for the care of her son at a rate of three dollars per week. Id. In 1947, the legislature passed a resolution authorizing the commissioner of welfare to bill at a minimum rate of eight dollars per week. Id., 28. When informed by letter, Sarafin replied that she was unable to pay eight dollars a week. Id. Thereafter, the state billed her at a rate of five dollars per week. Id. The stipulated facts were that the total cost of the son's care, based upon per capita cost, was $9,267.15. Id., 27. Sarafin paid $3,024.79 during her lifetime, leaving balance of $6,242.36 due as claimed by the state. Id. The state's claim for reimbursement was "founded solely upon the provisions of § 2663 of the General Statutes." Id., 29.
The defendant argued that the state is estopped from pressing its claim because "through the years the commissioner of welfare, by accepting payments from Mrs. Sarafin at the weekly rates charged without notifying her that any additional sums were due, led her to believe that she was under no further obligation." Id., 30. Responding to that argument, the court stated that "[a]n estoppel does not arise in a case such as this merely from the failure of the commissioner to make demand for the full amount due . . . The basis of the estoppel claimed is the conduct of the commissioner of welfare, a public official. Whatever obligation Mrs. Sarafin had to reimburse the state was not founded on contract between her and the commissioner of welfare. It was an obligation imposed by statute . . . The commissioner of welfare has no authority to waive an obligation so imposed by law, and consequently the state cannot be estopped from enforcing it by any conduct on his part . . . The state is not estopped from pressing its claim for reimbursement." (Citations omitted.) Id., 30-31.
These cases are cited for the proposition that state employees have no authority to waive an obligation imposed by law. Because both cases involved actions brought by state agencies grounded on alleged violations of certain statutes, it is clear that imposed by law refers to statutes created by the legislature, not the common law created by the courts. For this proposition to have any applicability to the plaintiff's waiver argument then, there must have been some at least arguably applicable statute that obligated the state and its employees not to pay the invoices for increased taxes.
The state argues that the plaintiff "also claims that the payments by [the department of public works] waived the statutory requirements of § 4b-26(c), which are incorporated in Section 27 (f) of the lease." (Defendant's Post-Trial Memorandum, p. 16.) Section 4b-26(c) provides: "In any lease containing a tax escalation clause, there shall be a provision that the state shall be relieved of all liability for increased taxes unless the landlord shall notify the commissioner of any pending increase in sufficient time to permit the state, on behalf of the landlord, to contest such increase if the commissioner determines it to be appropriate."
The clear and unambiguous language of § 4b-26(c) merely requires that a release of liability for increased taxes provision be contained within the lease. See General Statutes § 4b-26(c) ("there shall be a provision . . ."). It does not require that it be complied with in any particular way, nor does it restrict the state's ability to waive the requirements of the mandated provision. In fact, the statute was complied with by including a provision at Section 27(f) that mirrors its language. There was no waiver of § 4b-26(c) and the plaintiff makes no such claim. Therefore, the state's argument that the plaintiff's waiver claim cannot succeed because the state cannot waive obligations imposed by law, fails.
The state's second argument that the state did not waive its release from liability for increased taxes is that the state did not make a "knowing" waiver. As discussed above, the Supreme Court has stated that "[w]aiver is the intentional relinquishment of a known right . . . To constitute waiver there must be both knowledge of the existence of the right and intention to relinquish it . . . [W]here one lacks knowledge of a right, there is no basis upon which a waiver of it can rest." (Citations omitted; emphasis in original; internal quotation marks omitted.) Novella v. Hartford Accidental Indemnity Co., supra, 163 Conn. 561-62. Connecticut appellate courts have not explicitly stated what the standard is for determining whether a person or entity has relinquished a known right. In arguing that it did not make a "knowing" waiver, the state cites two cases: Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 618 A.2d 506 (1992) and Brauer v. Freccia, 159 Conn. 289, 268 A.2d 645 (1970).
In Wadia, the Supreme Court stated: "Assuming that implied waiver may avoid the right to rely on the statute, in order to sustain such a claim, the plaintiff would still have to make a showing that the defendants knew of their right to invalidate the contract under the act before they could waive its protection. The plaintiff has failed to establish that the defendants knew about the requirements of the act." Wadia Enterprises, Inc. v. Hirschfeid, 224 Conn. 240, 252, 618 A.2d 506 (1992). Given that the right at issue in Wadia was statutory, rather than contractual, Wadia is not helpful in determining what constitutes the requisite knowledge, nor is Brauer.
The Supreme Court has implicitly stated that "actual knowledge" of a right is required to make a knowing waiver of that right. See Reinke v. Greenwich Hospital Ass'n, 175 Conn. 24, 392 A.2d 966 (1978). "A necessary element to waiver is the requisite knowledge of the right . . . Waiver presupposes a full knowledge of an existing right or privilege and something done designedly or knowingly to relinquish it . . . There is nothing in the finding, or in those draft findings which were requested to be made a part of the finding, that indicates that counsel or the arbitrator were aware of the requirement of General Statutes § 52-414 that an oath be administered unless waived in writing . . . Neither the fact that the plaintiff raised the question of the oath, nor the fact that he agreed that no oath need be administered, indicates actual knowledge of a right which was intentionally relinquished. The court was not in error in its conclusion that `(t)he plaintiff did not waive the requirement of an oath by the arbitrator.'" (Citations omitted; emphasis added.) Id., 27-28.
But while the Supreme Court has implicitly said that the person or entity making the waiver must have actual knowledge of the existence of the right, it remains unclear, particularly in light of 1 Restatement (Second), [Contracts, Formation of Contract-Consideration] § 84, p. 217 (1981), whether, under Connecticut law, that person or entity is required to have actual knowledge of its ability to invoke that right under a given set of facts.
Section 84 of the Restatement is titled: "Promise to perform a duty in spite of non-occurrence of a condition." 1 Restatement (Second), [Contracts, Formation of Contract-Consideration] § 84, p. 217 (1981). It provides, in relevant part, "a promise to perform all or part of a conditional duty under an antecedent contract in spite of the non-occurrence of the condition is binding, whether the promise is made before or after the time for the condition to occur . . ." Id. Comment (a) explains that the above rule "can be thought of in terms of waiver of a defense not addressed to the merits, and rests in large part on the policies against forfeiture and unjust enrichment . . . [A] waiver made after the original duty has been discharged, though it is sometimes said to `reinstate' the duty, in fact creates a new duty unqualified by the condition." Id., comment (a), pp. 217-18. Comment (d) further explains that the above rule "applies primarily to conditions which may be thought of as procedural or technical," and gives as an example "conditions which . . . provide for the giving of notice . . ." Id., comment (d), p. 219.
Of particular interest is comment (b) to § 84, which provides: "`Waiver' is often inexactly defined as `the voluntary relinquishment of a known right.' . . . The common definition of waiver may lead to the incorrect inference that the promisor must know his legal rights and must intend the legal effect of the promise. But under § 93 it is sufficient if he has reason to know the essential facts." Id., comment (b), p. 218.
Section 93 provides: "A promise . . . is not binding unless the promisor knew or had reason to know the essential facts of the previous transaction to which the promise relates, but his knowledge of the legal effect of the facts is immaterial." 1 Restatement (Second), supra, § 93, p. 253. The second of two illustrations contained in § 93 is useful in understanding this principle: "A, an endorser of a note, did not receive due notification of its dishonor by the maker. Subsequently, in ignorance of the fact that the lack of notification had discharged him, A promises B, the holder of the note, to pay it. The promise is binding." Id.
Based on the principles set forth in the Restatement, including the illustration above, a "knowing" waiver thereunder is a waiver that, as a type of promise, is made by a person or entity, the promisor, with general knowledge of the facts implicating the right to be waived, even if that person or entity does not appreciate that the existence of those facts permits that person or entity to invoke the right. This court accepts this interpretation of a "knowing" waiver and applies it to the present case in light of the Connecticut precedent set forth above.
The evidence in this case reflects that there is no doubt that the state knew that the lease included a conditional right to a release of liability for payment of tax increases. An April 10, 2003 letter from the state to the plaintiff stated in definite terms that "per Section 27 of our lease dated June 30, 2000, as modified on October 13, 2000, the state of Connecticut will pay 60% of any real property taxes increases over the East Hartford Grand List of October 1, 2000 provided . . ." (Emphasis added.) (Plaintiff's Exhibit 3; Defendant's Exhibit F.) Amenta's letter then goes on to state four numbered conditions for the state's payment. The form and content of these conditions very closely mirror those of Section 27, subsections (b), (c), (d) and (e) of the lease. Thereafter, the letter states that the plaintiff "should send a copy of the receipted tax bill no later than 90 days after the due date for payment of the last installment." This requirement, and its language, very closely mirrors that of Section 27(f), the very section containing the release of liability provision at issue. The state essentially argues that Amenta, prior to writing the April 10, 2003 letter, scrutinized every part of Section 27 of the lease except for the release of liability provision. The court does not credit such conjecture.
Furthermore, unlike Wadia and Reinke v. Greenwich Hospital Ass'n, 175 Conn. 24, 392 A.2d 966 (1978), the right in question in this case is a contractual right, not a statutory right. In the context of a statutory right, it is conceivable that an ordinary non-contracting person or entity would not have knowledge of the existence of a right which they are eligible to invoke when it is created by the legislature. But here, the right was contained in a contract between the plaintiff and the state. The right was a contractual term, subject to negotiation, of which the state is presumed to have had knowledge in that one of its representatives signed the lease. Therefore, the court concludes that any waiver by the state was a "knowing" waiver.
To prove waiver, however, the plaintiff must also show that there was an intention to relinquish the right it argues was waived. See Novella v. Hartford Accidental Indemnity Co., supra, 163 Conn. 562. Applicable to this element is the Supreme Court's statement that "[w]aiver does not have to be express, but may consist of acts or conduct from which waiver may be implied . . . In other words, waiver may be inferred from the circumstances if it is reasonable so to do." (Citation omitted; internal quotation marks omitted.) Id.
The Restatement supports the Supreme Court's conclusion that a waiver may be implied. Section 84, comment (e) explains that, as to form, "[a]djustments in an on-going transaction commonly take place in a setting which fulfills some of the functions of legal formalities, and the probability of reliance is high . . . Even when the requirement of a technical condition is waived after the non-occurrence of that condition, the effect is often to achieve a result which seems fair without regard to waiver . . . [F]ormal requirements are at a minimum. It is immaterial how the promisor manifests his intention to fulfill the prior duty without performance of the condition. Words of promise or waiver, though often used, are unnecessary; in many situations non-verbal conduct is enough." 1 Restatement (Second), supra, § 84, comment (e), p. 220.
Illustration 5, which follows comment (e), is instructive. "A, an insurance company, issues to B a policy of automobile liability insurance, under which it is a condition of A's duty to pay that B notify A `as soon as practicable' after an accident. An accident occurs, but B does not notify A as soon as practicable. Without any statement concerning the non-occurrence of the condition, A begins to defend B in an action brought against B as a result of the accident. A's beginning to defend B operates as a promise to pay in spite of the non-occurrence of the condition." Id.
The court concludes that the state, by its conduct implicitly waived its release from liability for tax increases for several reasons. First, as discussed above, the state's April 10, 2003 letter, by requiring that the state comply with five different provisions of Section 27 of the lease, but not the provision at issue, implicitly chose not to require the plaintiff to comply with its obligation to provide notice of revaluation to the state.
Second, following the plaintiff's response to the April 10, 2003 letter, including the enclosure of several documents, a letter in response, dated April 23, 2003 and signed by Amenta, stated that the " only other information required that was not provided is a note from the East Hartford tax assessor . . . Once this information is received by this office, we will ask that the department of information technology expedite its tax reimbursement payment to your company." (Emphasis added.) (Plaintiff's Exhibit 5; Defendant's Exhibit G.) As argued by the plaintiff, this language implies that, but for providing the requested note, the state intended to comply with the provisions of Section 27 despite the lack of timely notice of the 2001 revaluation from the plaintiff.
Third, after the plaintiff provided the requested note to the state, the state made a payment in satisfaction of an invoice for the tax increases reflected in the first two installments of the plaintiff's tax bill. Fourth, the state later made a second payment in satisfaction of a second invoice for tax increases from the plaintiff. Fifth, the state in a January 26, 2004 letter to Keller, signed by Amenta, stated that relative to certain space occupied by the judicial branch, the judicial branch was authorized to commence rental payments to the plaintiff, including payments for "real estate tax increases . . ." (Plaintiff's Exhibit 7.)
In sum, in the present case, the state, in Section 27 of the lease, promised the plaintiff that it would pay sixty percent of any real property tax increases on the premises "provided" that the plaintiff complied with subsections (a) through (e) of that section. The Restatement makes clear that subsection (f) of Section 27 created a conditional release of "all liability for increased taxes based on any revaluation of the subject premises . . ." That release is conditional because it relies on the occurrence of the condition that the plaintiff, after receiving notice of revaluation from East Hartford, fail to give the Commissioner of the Department of Public Works notice of that revaluation within thirty days. Because that condition occurred, the state would have been released from its liability for the tax increases if it had not made any subsequent payments.
But the Restatement also makes clear that, when the state said in the April 10, 2003 letter that it " will pay 60% of any real property taxes increases over the East Hartford Grand List of October 1, 2000;" (emphasis added); provided that certain conditions were met, the state waived its release from liability, effectively making a subsequent promise to make tax increase payments in the same way as it was required to make those payments under Section 27, creating "a new duty unqualified by the condition." See 1 Restatement (Second), supra, § 84, comment (a), pp. 217-18.
The circumstances between the parties are akin to those in illustration 5 of § 84 of the Restatement discussed above. It was effectively a condition of the state's payment of increased taxes following a revaluation that the plaintiff notify the state of that revaluation within thirty days of receiving notice from East Hartford. A revaluation occurred, but the plaintiff did not notify the state within thirty days of its receiving notice. Without any statement concerning the non-occurrence of the condition, the state paid the increased tax to the plaintiff which were the result of the revaluation. Therefore, the state's payment of the increased tax to the plaintiff operates as a promise to pay in spite of the non-occurrence of the condition.
For all the foregoing reasons, the court concludes that the state waived its release from liability for payment of tax increases pursuant to the 2001 revaluation, and therefore, is not relieved of its liability for paying those tax increases by operation of the notice of revaluation provision contained in Section 27 of the lease. Because the court concludes that a waiver occurred, it does not consider the plaintiff's arguments regarding forfeiture and prejudice.
The court notes that Amenta's testimony at trial showed that in 2002, no procedure existed by which the department of public works, upon receipt of a notice of revaluation, considered the reasonableness of an assessment, or whether to seek a tax appeal of an assessment. (Transcript, 4/13/10, pp. 91-92.) Further, the state does not argue that it was actually prejudiced by any failure on the part of the plaintiff to give notice of the new assessment.
C Section 27's Condition that Receipted Tax Bills be Timely Submitted
The state also argues that the plaintiff is not entitled to certain payments due to violations of Section 27(f) of the lease for the following reasons: (1) the plaintiff's invoice for the second installment of 2002, dated January 22, 2004; (Plaintiff's Exhibit 12); was sent to the department of information technology, not to the Department of Public Works; (2) the invoice for the second installment of 2002 does not include any receipted tax bills, therefore, receipted tax bills were not forwarded to the Commissioner of the Department of Public Works within ninety days after the due date for the payment of the last installment of taxes in 2002; (3) the amount due for the second installment of 2002 was included in another invoice, dated July 7, 2004; (Plaintiff's Exhibit 13); that also contained an amount due for the first installment of 2003, but that invoice was sent more than ninety days after the due date for the second installment of 2002; (4) the July 7, 2004 invoice was sent to the department of information technology; and (5) the Department of Information Technology has no record of receiving the invoice for the second installment of 2003. (Plaintiff's Exhibit 14.) Therefore, the state disputes the bills regarding a total of three tax installments, the second installment of 2002, and both installments of 2003.
The state's clarification actually stated that "the DOT has no record of receiving the invoice," and the court presumes that it intended to refer to the DOIT.
These arguments were set forth by the state in a pleading, filed on September 29, 2010, submitted in response to an order by the court for clarification of the state's arguments in its post-trial memorandum. The state's original argument read that it disputed invoices related to installments "for the second installment of 2003, and both installments of 2003 and 2004 . . ." (Defendant's Post-Trial Memorandum, p. 22.)
The plaintiff responds to the state's arguments by arguing that: (1) as to the January 22, 2004 invoice pertaining to the second tax installment of 2002, there was no testimony that the invoice was not timely submitted in relation to the payment due date, nor was there any testimony that the invoice was not submitted to the state or that it was improperly supported; (2) the claim for payment pertaining to the second installment of 2002 was resubmitted in the July 7, 2004 invoice along with a copy of the receipted tax bill for that payment, and did not make the claim submitted in the January 22, 2004 invoice untimely; (3) the July 7, 2004 invoice was not untimely submitted as to the first installment of 2003, and the fact that it was sent to the department of information technology rather than the Department of Public Works is not material; and (4) the plaintiff has submitted a copy of the invoice pertaining to the second installment of 2003 along with receipted tax bills, and there was no testimony that it was not received by the state.
These arguments by the plaintiff were set forth in a pleading, filed on September 30, 2010, in response to the court's clarification order, and the defendant's pleading also filed in response to that order. See footnote 14.
The plaintiff also argues in its post-trial memoranda that "the evidence shows that all invoices were properly submitted to the state in a timely fashion. No testimony was presented by the state to show otherwise." In support of its argument, the plaintiff cites to Plaintiff's Exhibits 11, 12, 13 and 14. Similarly, in support of its argument, the state cites to Defendant's Exhibit N.
Defendant's Exhibit N is the May 7, 2008 letter from Mallory to Keller acknowledging receipt of the plaintiff's request for reimbursement of tax increases for the first and second installments of the 2006 calendar year. The only portion of the letter relevant to the present issue states: "As you are aware, Fremont currently has a claim before the claims commissioner for tax increases resulting from the town of East Hartford's revaluation of its 2001 grand list. The state's position remains that the Fremont did not notify the state of a revaluation in accordance with state statute and the terms and conditions of the lease, and Fremont did not timely submit bills to the department of public works for payment thereafter." (Emphasis added.)
Attached to the letter is a spreadsheet. Mallory testified to the meaning of the content of the spreadsheet. He explained that if the state had not received a copy of a tax bill paid by the lessor within ninety days of the date that each year's last installment was due, then the spreadsheet contained a zero for the balance due for that particular tax installment, and the state did not make payment on the invoices related to those tax bills. (Transcript 4/13/2010, pp. 100-01.) The spreadsheet contains zeros regarding the second tax installment of 2002, and both installments in 2003 and 2004, meaning that it was the state's position that it had not received timely submission of bills for payment of increased taxes pertaining to the second installment in 2002, and both installments in 2003 and 2004. (Plaintiff's Exhibit 22; Defendant's Exhibit N.; Transcript, 4/13/10, pp. 100-01.)
Based on the clarification of its arguments submitted by the state, it does not argue that it failed to receive timely submission of bills for payment of increased taxes pertaining to either installment of 2004. Therefore, to the extent that any such claim was ever raised as to those installments, they are deemed abandoned.
The relevant part of Section 27 of the lease provides: "Following payment by the LESSOR of any tax for which the LESSOR is entitled to a reimbursement as hereinbefore provided, the LESSOR must present a copy of the receipted tax bill to the Department of Public Works commissioner no later than ninety (90) days after the due date for the payment of the last installment of the tax, in order to be entitled to reimbursement. The LESSOR'S failure to apply for reimbursement within the time herein specified shall terminate any responsibility of the LESSEE to make reimbursement."
Before discussing the relevant evidence submitted by the plaintiff, the court notes that the plaintiff argues that the meaning of the phrase "after the due date for the payment of the last installment of the tax," is ambiguous, contending that it is not clear whether it refers to the last installment due pursuant to East Hartford's fiscal year, or a calendar year. Given the evidence presented, showing that nearly all of the issues in this matter revolve around East Hartford's real property tax billing schedule, the court concludes that there is no ambiguity that the phrase "payment of the last installment of the tax" refers to East Hartford's fiscal year. Therefore, "the last installment of the tax" refers to any installments due on January 1 of a particular year, which pertains to the last installment of taxes due for any particular calendar year two years prior.
The documentary evidence submitted by the plaintiff includes invoices for tax increases for all of the installments in question. The last installment of the tax owed for calendar year 2002 was due on January 1, 2004. The plaintiff submitted as evidence an invoice dated January 22, 2004 which reflects the tax increases owed pursuant to that second installment. (Plaintiff's Exhibit 12.) The address line reads: "State of Connecticut-DOIT." There are no documents attached to the invoice.
The last installment of the tax owed for 2003 was due on January 1, 2005. The plaintiff submitted as evidence invoices dated July 7, 2004 and January 25, 2005 which pertain to the tax increases owed pursuant to the 2003 calendar year tax installments. (Plaintiff's Exhibits 13, 14.) The July 7, 2004 invoice is addressed to "State of Connecticut-DOIT," while the January 25, 2005 invoice is addressed to "Commissioner-Department of Public Works."
The state acknowledged receipt of the July 7, 2004 invoice in a letter, dated August 25, 2004, from Mallory to Keller. (Defendant's Exhibit I.) Attached to the copy of the July 7, 2004 invoice are documents which appear to be copies of the plaintiff's 2003 calendar year tax bills. (Plaintiff's Exhibit 13.) Each document contains three separate bills, one reading "INST 1 DUE," indicating that it pertains to the year's first installment, one reading "INST 2," indicating that it pertains to the year's second installment, and one reading "TOTAL DUE," indicating that it summarizes the year's total tax bill. Each document's first bill, pertaining to the first installment, is stamped "PAID JUL 22 2004 COLLECTOR OF REVENUE EAST HARTFORD, CT." (Plaintiff's Exhibit 13.)
Also attached to the July 7, 2004 invoice is a document containing a photocopy of a duplicate copy of East Hartford's tax bill sent to the plaintiff for the second installment of 2002. The document also contains a photocopy of a check from the plaintiff to the East Hartford collector of revenue, dated January 20, 2004, for $299,585.84. (Plaintiff's Exhibit 13.)
Attached to the January 25, 2005 invoice are documents, similar to those above, which consist of another set of copies of the plaintiff's 2003 calendar year tax bills. But on each of these documents, the second bill, pertaining to the second installment, is stamped "PAID JAN 14 2005 COLLECTOR OF REVENUE EAST HARTFORD, CT." (Plaintiff's Exhibit 14.)
The plaintiff presented no testimonial evidence regarding the issue of ninety days notice of receipted tax bills, beyond the documentary evidence discussed above. The defendant offered only the testimony of Mallory that it was the state's position that it did not receive timely notice of the second installment of 2002, and both installments of 2003.
In summary, the documentary evidence above shows: (1) The invoice pertaining to the second installment for 2002 was sent to the Department of Information Technology; (2) also as to the second installment for 2002, the plaintiff submitted a check to East Hartford for this installment prior to the January 22, 2004 date of the invoice for tax increases due from the state; (Plaintiff's Exhibit 13); (3) as to the first installment for 2003, the installment was receipted as paid by East Hartford on July 22, 2004, and those receipted tax bills, as well as the July 7, 2004 invoice, were received by the state as of August 25, 2004 at the latest; (4) the July 7, 2004 invoice was sent to the Department of Information Technology; (5) as to the second installment for 2003, the installment was receipted as paid by East Hartford on January 14, 2005, and those receipted tax bills were sent to the state along with the January 25, 2005 invoice.
1. Whether Receipted Tax Bills Were Timely Submitted
The plaintiff's evidence demonstrates by a preponderance of the evidence that the plaintiff paid each disputed year's tax bill in full within "ninety (90) days after the due date for the payment of the last installment of the tax" as contemplated by Section 27(f). Therefore, it is not an issue that the plaintiff would have been unable to comply with that provision because it had paid its bill outside that period. The only question is whether each invoice, along with copies of the receipted tax bills relevant to that invoice, were sent to the Department of Public Works commissioner within that ninety-day period.
While the plaintiff argues in its post-trial memorandum and subsequent clarification that there was "no testimony presented by the state to show" that any of its invoices were not properly submitted to the state in a timely fashion, Mallory did testify that the spreadsheet that is part of Defendant's Exhibit N reflects that timely notice was not received by the state for the disputed installments, meaning that either the invoice, or copies of the relevant receipted tax bills, were not received within ninety days of the last installment due for the applicable calendar year. (Transcript, 4/13/2010, pp. 100-01.) As a result, the resolution of this dispute depends on the content and credibility of each party's exhibits.
The payment for the first installment of 2003 was due on July 1, 2004, and the plaintiff sent an invoice for payment pursuant to that installment on July 7, 2004. As to this invoice, the state's arguments regarding the untimely submission of receipted tax bills are only relevant to the last installment of 2002. The state, in fact, confirmed receipt of this invoice and the receipted tax bills relevant to the first installment of 2003 in Mallory's August 25, 2004 letter, well within the required ninety-day time period. (See Defendant's Exhibit I.) Therefore, the receipted tax bills for the first installment of 2003 were timely submitted to the state by the plaintiff.
As to the invoice for the second installment of 2003, the state argues only that the department of information technology has no record of receiving that invoice and receipted tax bills. The plaintiff entered into evidence, however, a copy of the invoice for the second installment of 2003 with the applicable receipted tax bills attached. There was no objection by the state to their entry into evidence as full exhibits. The second installment for 2003 was due on January 1, 2005. The tax bills are stamped as received on January 14, 2005. The plaintiff's invoice to the state is dated January 25, 2005. Given the dates of these documents, along with the lack of an objection by the state to their entry into evidence as full exhibits, the court concludes that the invoice and receipted tax bills for the second installment of 2003 were timely submitted to the state by the plaintiff. Further, the January 25, 2005 invoice was addressed to the Department of Public Works commissioner, not the Department of Information Technology, and thus, there is no reason to expect the department of information technology to have any record of receiving the invoice, as argued by the state.
The second installment of 2002 was due on January 1, 2004. The plaintiff submitted as evidence a January 22, 2004 invoice for payment pursuant to the second installment of 2002. However, unlike the evidence submitted applicable to the second installment of 2003, the exhibit does not have receipted tax bills attached. (See Plaintiff's Exhibits 12 and 13.)
The plaintiff argues that it resubmitted copies of the relevant receipted tax bills by attaching them to its July 7, 2004 invoice, but the document that the plaintiff presumably refers to is not a receipted tax bill. It is only a copy of the bill received from East Hartford for the taxes due, and a copy of the check presumably submitted to the state as payment of that bill. (See Plaintiff's Exhibit 13.) Unlike the other receipted tax bills submitted in evidence by the plaintiff, this document is devoid of any type of date stamp or other indicator of receipt by East Hartford.
While the plaintiff also argues that the state has failed to offer any evidence that the plaintiff failed to submit copies of receipted tax bills to the state, it is the plaintiff's burden to present evidence in support of its claims in order to prove them. The plaintiff has not submitted any evidence, either in documentary or testimonial form, that supports its claims that it sent receipted tax bills regarding the second installment of 2002 as required by Section 27 of the lease.
On the other hand, the state some evidence that supports its argument that it did not receive receipted tax bills regarding the second installment of 2002. During Mallory's testimony, he explained that the spreadsheet contained in Defendant's Exhibit N indicates that receipted tax bills were not received by the state as to the second installment of 2002. The plaintiff has not rebutted this evidence. For the foregoing reasons, the court finds that while the plaintiff has established by a preponderance of the evidence that it timely submitted receipted tax bills for all the other installments at issue, the plaintiff has failed to prove that it timely submitted a receipted tax bill for the second installment of 2002 to the state for payment.
2. Whether the State Should be Estopped from Denying Payment Based on the Plaintiff's Failure to Timely Submit Receipted Tax Bills
The plaintiff argues that in addition to the reasons argued for above, the state should be estopped from denying the plaintiff's claims for payment of tax increases, under the timely submission of receipted tax bills provision, based on principles of equity. Specifically, the plaintiff argues that its submission of invoices for payment of tax increases was guided by the state's acceptance and payment of the first three tax increase installments for which it was billed. The state did not specifically address this argument by the plaintiff. The court considers this argument in regard to the only tax installment claim for which it has failed to prove timely submission of receipted tax bills, the second installment of 2002.
"The doctrine of equitable estoppel is well established. [W]here one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is [precluded] from averring a different state of things as existing at the time . . . Equitable estoppel is a doctrine that operates in many contexts to bar a party from asserting a right that it otherwise would have but for its own conduct . . . In its general application, we have recognized that [t]here are two essential elements to an estoppel-the party must do or say something that is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief, and the other party, influenced thereby, must actually change his position or do some act to his injury which he otherwise would not have done." (Citations omitted; internal quotation marks omitted.) Blackwell v. Mahmood, 120 Conn.App. 690, 694-95, 992 A.2d 1219 (2010).
In making its estoppel argument, the plaintiff argues that if it followed some course of conduct that resulted in the untimely submission of receipted tax bills to the state, it was induced to take such action by the state's acceptance through payment of three tax increase installments. The plaintiff at least partially relies on its previously raised contention that the timely notice provision is ambiguous, and therefore, any untimeliness in the sending of the invoices is the result of that ambiguity. The court reiterates that the provision unambiguously requires the plaintiff to present a copy of a receipted tax bill to the state no later than ninety days after the due date for the payment of the last, of two, installments of the tax relevant to that bill.
The estoppel argument then, in the context of this timely submission of receipted tax bills provision, must be premised on a contention that the plaintiff either did not submit copies of receipted tax bills with the first three tax installment invoices, or that the plaintiff did submit copies of receipted tax bills, but beyond the ninety-day period, and because the state made payment in spite of those inadequacies, the plaintiff was thereby induced to follow such a course of conduct with respect to the submission of invoices thereafter.
The evidence shows that, with respect to the plaintiff's first invoice for tax increases, dated March 26, 2003, and pursuant to the tax installments for 2001, the plaintiff submitted receipted tax bills sometime after April 10, 2003 and prior to April 23, 2003. (Plaintiff's Exhibits 3, 4, 5; Defendant's Exhibits F, G.) Given the January 1, 2003 due date of the last installment of the corresponding tax bill, those receipted tax bills were provided after the ninety-day limit, but nevertheless, the state accepted their submission as valid and paid that bill. (Plaintiff's Exhibit 10.)
With respect to the plaintiff's second invoice for tax increases, dated July 24, 2003, and pursuant to the first tax installment for 2002, the evidence shows that the plaintiff again submitted a receipted tax bill. (Plaintiff's Exhibit 11.) This time, however, because the bills were submitted sometime before August 20, 2003, and the last installment for the year 2001 would have been due January 1, 2004, the receipted tax bills were within the ninety-day limit. (Plaintiff's Exhibit 11.) The state again accepted the plaintiff's submission as valid and paid the bill. (Plaintiff's Exhibit 11.)
Thereafter, the state stopped making further payments until 2006, although, the state did credit the plaintiff's account regarding the invoices received for the installments due in 2004. (See Plaintiff's Exhibit 17; Defendant's Exhibit K.) There is no evidence that indicates whether the state received receipted tax bills along with those invoices.
The foregoing evidence demonstrates that the state made payment on three tax increase installments after receiving receipted tax bills even though the receipted tax bills regarding two of those installments were received in excess of ninety days from the due date of the last installment of that year's tax. Relying on principles of estoppel, those facts would support a conclusion that the state should be estopped from denying tax increase installment payments when receipted tax bills pertaining to those installments are received in excess of ninety days from the date of the relevant year's last tax installment.
The plaintiff, however, has failed to present any evidence that receipted tax bills pertaining to the second installment for 2002 were either sent by the plaintiff, or received by the state. As previously discussed, while the plaintiff submitted the January 22, 2004 invoice for the second installment of 2002 as evidence, it has not submitted any evidence of the existence of receipted tax bills for this installment. (See Plaintiff's Exhibit 12 and 13.)
The lack of evidence as to the existence of receipted tax bills is important because the evidence, discussed above, indicates that although the state may have permitted the plaintiff to submit receipted tax bills in excess of the ninety-day period required by the lease, the state never made payment without having received a receipted tax bill. As previously noted, the plaintiff has submitted no evidence of receipt by East Hartford of the plaintiff's payment of the second installment of 2002. Therefore, the court cannot conclude that the state should be estopped from denying payment for the second installment of 2002 for which there has been no evidence produced by the plaintiff that receipted tax bills were submitted.
The court notes that this conclusion is strengthened by the fact that it comports with its waiver conclusion, because, as the Supreme Court has stated, "while recognizing the analytic distinction between express waiver and estoppel, . . . implied waivers and estoppels by conduct are so similar that they are nearly indistinguishable." (Internal quotation marks omitted.) O'Hara v. State, 218 Conn. 628, 641, 590 A.2d 948 (1991).
3. Whether the State is Liable to the Plaintiff For Payments Where Invoices Were Sent to the Department of Information Technology
The state further argues that it should not be held liable to the plaintiff for payment of tax increases pursuant to the second installment of 2002 and first installment of 2003 because the plaintiff's invoices regarding those installments were sent to the department of information technology, rather than "the department of public works commissioner" as required by Section 27(f) of the lease.
While it is true that the invoices regarding these installments were both addressed to the "State of Connecticut-DOIT" and not the "Commissioner-Department of Public Works" as the invoice regarding the second installment of 2003 and all invoices thereafter were addressed, the plaintiff's invoices regarding both installments of 2001 and the first installment of 2002 were similarly addressed to the Department of Information Technology. (See Plaintiff's Exhibits 9, 11.) Nevertheless, as has been previously discussed in this decision at great length, the state accepted these invoices as valid and made payment to the plaintiff pursuant to them.
Without deciding whether the plaintiff's failure to address its invoices to the department of public works would otherwise furnish grounds for the state to avoid its obligation to make payment pursuant to those invoices, the court concludes, based on the principles of waiver already espoused, that the state has waived its ability to raise the plaintiff's failure to address its invoices to the Department of Public Works commissioner as a ground to avoid its obligations to make payments under the terms of the lease.
D Whether the State Admitted that it is Legally Obligated to Make Tax Increase Payments
As a final argument in its post-trial memorandum, the plaintiff argues that state officials have acknowledged and admitted that the state is liable for the additional rent at issue. Specifically, the plaintiff argues that it has produced evidence that state officials, including Arute, have stated to the plaintiff: (1) that they believe that the state is legally obligated to pay the additional rent sought by the plaintiff, (2) that the position now urged by the state in regard to the notice of 2001 revaluation is incorrect; (3) that the Department of Information Technology set aside monies from its budget to satisfy its legal obligation to pay the additional rent to the plaintiff, and (4) the foregoing admissions by state officials are admissible and binding on the state as statements of a party-opponent under Connecticut's code of evidence.
The state rebuts the plaintiff's argument by contending that: (1) Arute had no authority to waive the statutory provisions of Section 27(f); (2) only the department of public works has authority to authorize payments for increased taxes under Section 27(f); (3) Arute has no authority to bind the state; (4) Arute's statements are hearsay; and (5) any statement by Arute is not an admission, but only an opinion.
The evidence on which the plaintiff apparently relies in support of this argument is Keller's testimony that he had discussions with Arute in regard to the present claim for outstanding taxes. (Transcript, 4/13/10, p. 32.) Keller testified that he and Arute had a conversation in which Arute told him that he "felt that the department of information technology owed the taxes, that they should pay the taxes and that they were, in essence, escrowing the taxes — escrowing the money to be able to pay them." (Transcript, 4/13/10, pp. 32-33.) The state's counsel objected to this testimony on hearsay grounds, but the court allowed it as a statement of a party, the state. (Transcript, 4/13/10, p. 32.)
Keller's testimony shows only that it was Arute's feeling, ergo, his opinion, that the state owed the plaintiff the alleged tax increase payments. That it was Arute's opinion that the state should pay the plaintiff for the increased taxes, and that the Department of Information Technology was taking steps to be able to make those payments should the state be found liable for them following the resolution of this case, is not a binding admission of liability by the state. The court concludes that Keller's testimony pertaining to the conversation he had with Arute has no legal effect on the resolution of this case.
III PREJUDGMENT INTEREST
Based on the foregoing findings of fact and conclusions of law, the court further finds that the failure of the state to pay the additional rent due the plaintiff for increased taxes based on the 2001 revaluation in accordance with the terms of the lease was wrongful and, pursuant to General Statutes § 37a-3, the plaintiff is entitled to prejudgment interest on those amounts as damages for the detention of those monies after they became payable. See Urich v. Fish, 112 Conn.App. 837, 843-44, cert. denied, 292 Conn. 909 (2009). Such interest is to be calculated based on the amounts that the state failed to pay the plaintiff from the date on which each claim for additional rent was due and payable.
IV CONCLUSION
For all the foregoing reasons, the court finds the plaintiff has proved by a preponderance of the evidence that the state is liable to the plaintiff for the following tax increase payments, as billed: the first and last installments for 2001, based on the 2001 assessment of the premises; the first installment for 2002, based on the 2001 assessment of the premises; the first and last installments for 2003, 2004 and 2005, based on the 2001 assessment of the premises; and the first and last installments for 2006, based on the 2006 assessment of the premises. Since the plaintiff has failed to prove that it timely submitted a receipted tax bill from the Town of East Hartford, the state is not liable to the plaintiff for the tax increase payment for the last installment of 2002.
Although the state has previously made payment towards the first and last installments for 2001 and the first installment for 2002, and admitted liability for the 2006 tax increase payments; (Plaintiff's Exhibit 22; Defendant's Exhibit N); the court includes these installments in its conclusion as to the state's liability to the plaintiff because, to the extent that payment of the 2006 installments was, as previously discussed, reduced by a "setoff" against amounts that the state maintained were improperly paid to the plaintiff towards both 2001 installments and the first installment of 2002, it may be relevant to the court's determination of damages.
Accordingly, judgment is hereby ordered in the amount of $370,901.33 plus prejudgment interest at the rate of ten percent (10%). The plaintiff is hereby ordered to submit to the court, a computation of the amount of prejudgment interest it claims in accordance with this memorandum of decision within ten days of this order.
This amount is calculated based on the amount claimed in Plaintiff's Exhibit 23 less the amount billed for the second installment of 2002 as contained in Plaintiff's Exhibit 12.