Opinion
No. LLI CV 06 5000674S
April 6, 2009
MEMORANDUM OF DECISION
I. SUMMARY OF FACTS
The Plaintiff, Torringford Farms Association Inc., brought this action to foreclose its statutory lien under the Common Interest Ownership Act, Conn. Gen. Stats. §§ 47-200 through 47-299 ("Act"), on Unit #26, also known as 123 Trotter's Way ("Unit"), at Torringford Farms in the City of Torrington ("Common Interest Community"), which is owned by the Defendant, Carol G. Villarouel ("Unit Owner"). The other defendants are mortgagees claiming to hold a mortgage on the Unit and judgment lienors claiming an interest in the Unit who have not appeared. The statutory lien secures fines that the Association levied against the Unit Owner for violating the governing documents of the Common Interest Community by replacing the power venter on her furnace with a piece of galvanized pipe. The governing documents to which the Unit is subject include the Declaration of Torrington Farms, A Planned Community, Exhibit D9 ("Declaration"); the Bylaws of Torringford Farms Association, Inc., Exhibit D10 ("Bylaws"); and the Rules of Torringford Farms Association, Inc., Exhibit P10 ("Rules"). The Unit Owner contends that the Association did not comply with the requirements of the governing documents when it levied the fines, and she raised several affirmative defenses.
II. APPLICATION OF EQUITABLE PRINCIPLES IN THE FORECLOSURE OF A CONDOMINIUM LIEN
Equitable principles apply to the Common Interest Ownership Act, General Statutes § 47-200 et seq. Specifically, General Statutes § 47-207 provides: "The principles of law and equity, including the law of corporations and unincorporated associations, the law of real property, and the law relative to capacity to contract, principal and agent, eminent domain, estoppel, fraud, misrepresentation, duress, coercion, mistake, receivership, substantial performance, or other validating or invalidating cause supplement the provisions of this chapter, except to the extent inconsistent with this chapter." (Emphasis added.)
"`Since a mortgage foreclosure is an equitable proceeding, either a forfeiture or a windfall should be avoided if possible. In a foreclosure proceeding the trial court must exercise its discretion and equitable powers with fairness not only to the foreclosing mortgagee, but also to subsequent encumbrancers and the owner.' . . . Farmers Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 354, 579 A.2d 1054 (1990). The trial court in a foreclosure action has broad discretion in determining whether to permit a foreclosure or to lessen the stated indebtedness. Hamm v. Taylor, 180 Conn. 491, 497, 429 A.2d 946 (1980); Gulack v. Gulack, 30 Conn.App. 305, 317-18, 620 A.2d 181 (1993)." Thompson v. Orcutt, 70 Conn.App. 427, 435-36, 800 A.2d 530 (2002).
In McKeever v. Fiore, 78 Conn.App. 783, 829 A.2d 846 (2003), the Appellate Court reviewed the trial court's application of equitable principles in the context of a foreclosure action. In that case, the trial court had "in its memorandum of decision, ruled in favor of the plaintiff, finding a debt of $47,790.60. Citing its equitable powers, the court limited the plaintiff's award of interest to one year and awarded attorneys fees in the amount of $4,200, although the plaintiff had claimed $26,450. Though late charges were provided for in the note, the court denied all late charges." Id., 787. Thereafter, the trial court rendered judgment of strict foreclosure. Id.
On appeal, the plaintiff claimed "that the court improperly invoked its equitable powers in its financial award because the doctrine of unclean hands was not pleaded as a special defense by the defendants." Id. The Appellate Court disagreed, explaining the equitable powers of the trial court as follows: "An action of foreclosure is peculiarly an equitable action. Federal Deposit Ins. Corp. v. Hillcrest Associates, 233 Conn. 153, 170, 659 A.2d 138 (1995); Beach v. Isacs, 105 Conn. 169, 176, 134 A. 787 (1926). Hence, the court may consider all relevant circumstances to ensure that complete justice is done. Hartford Federal Savings Loan Assn. v. Lenczyk, 153 Conn. 457, 463, 217 A.2d 694 (1966).
"`[T]he determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court.' . . . Connecticut Bank Trust Co. v. Winters, 225 Conn. 146, 162, 622 A.2d 536 (1993). Discretion means `a legal discretion, to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.' . . . Hammerberg v. Leinert, 132 Conn. 596, 604-05, 46 A.2d 420 (1946). `For that reason, equitable remedies are not bound by formula but are molded to the needs of justice.' Montanaro Bros. Builders, Inc. v. Snow, 4 Conn.App. 46, 54, 492 A.2d 223 (1985)." McKeever v. Fiore, supra, 78 Conn.App. 788.
In McKeever, the basis for the plaintiff's argument that the trial court had improperly considered the doctrine of unclean hands was the fact that the trial court had erroneously stated in its memorandum of decision that the defendant had raised the doctrine of unclean hands in a special defense, despite the fact that the defendant had not been allowed to amend its answer to include that defense. Id., 788.
The Appellate Court rejected this argument, explaining: "Our Supreme Court has insisted that equity must look to substance and not mere form. Bender v. Bender, 258 Conn. 733, 751, 785 A.2d 197 (2001); Connecticut National Bank v. Chapman, 153 Conn. 393, 397, 216 A.2d 814 (1966). `A failure to do equity need not be pleaded by defendant where the pleading on behalf of plaintiff or the proof discloses the inequitable position of plaintiff . . .' 30A C.J.S. 298, Equity § 96 (1992)." McKeever v. Fiore, supra, 78 Conn.App. 789. On this basis, the Appellate Court concluded "that in light of the court's inherent equitable powers in a foreclosure action, the court did not improperly consider the equitable doctrine of unclean hands without it being specifically pleaded." Id.
The plaintiff in McKeever also claimed "that the court abused its discretion in the manner in which it applied the doctrine of unclean hands by limiting the award of interest to a one year period. In the plaintiff's proposed findings of fact submitted to the court on October 9, 2001, he sought $113,280.11 in interest. The court awarded him $50,180.21." Id., 790.
The Appellate Court held that the trial court did not abuse its discretion in limiting the interest award to one year. It explained that "[t]he application of the doctrine of unclean hands rests within the sound discretion of the trial court. Thompson v. Orcutt, supra, 257 Conn. 308. When the exercise of judicial discretion is called on, its exercise will not ordinarily be interfered with on appeal. Sturman v. Socha, 191 Conn. 1, 7, 463 A.2d 527 (1983). We are entitled to reverse the court's exercise of its equitable powers only if that exercise was unreasonable. Connecticut Bank Trust Co. v. Winters, supra, 225 Conn. 161. Consequently, when we review the exercise of discretion by the trial court, every reasonable presumption will be given in favor of the correctness of its ruling. Camp v. Booth, 160 Conn. 10, 13, 273 A.2d 714 (1970).
"`Equity will not afford its aid to one who by his conduct or neglect has put the other party in a situation in which it would be inequitable to place him.' Glotzer v. Keyes, 125 Conn. 227, 231-32, 5 A.2d 1 (1939). Were the defendants forced to pay almost a decade of interest as the plaintiff urges, it would amount to a windfall to him. See Thompson v. Orcutt, 70 Conn.App. 427, 435, 800 A.2d 530, cert. denied, 261 Conn. 917, 806 A.2d 1058 (2002)." McKeever v. Fiore, supra, 78 Conn.App. 790-91. Accordingly, the Appellate Court concluded that "the court did not abuse its discretion in applying the doctrine of unclean hands to limit the award of interest to a one year period." Id., 791.
The court further held that the trial court did not abuse its discretion in limiting the amount of attorneys fees to $4,200, although the plaintiff had requested $26,450. Id. The court explained: "Attorneys fees in foreclosure actions are within the court's equitable discretion and are subject to the control of the court, which may, sua sponte, reduce the amount at its discretion or after a hearing if an adverse party contests their validity or reasonableness." Id.
III. ADEQUACY OF NOTICE
In the present case, the parties disagree as to whether the defendant received notice of the plaintiff board's decision to impose fines of $25 per day in December of 2004. In the plaintiff's proposed findings of fact, it states that on December 9, 2004, "the Association gave notice in a letter . . . to the Unit Owner of the Executive Board's decision to levy fines of $25.00 per day until the power venter's compliance with the governing documents was resolved. The notice, Exhibit P30, was given in the same manner as the notice of the September 8 and December 8 meetings of the Executive Board." (Plaintiff's proposed findings of fact, pp. 11-12, ¶ 38.) In the defendant's proposed findings of fact, the defendant states that the "[l]etter dated March 17, 2005 was the first notice defendant received of the fine the Board levied against her." (Defendant's proposed findings of fact, p. 3, ¶ 15.)
In her brief, the defendant argues that the board levied the fine without giving her "prior written notice of the proposed action, and not providing her a date, time and place for a hearing on the fine." (Defendant's brief, p. 6.) She maintains that the board is required, under the declaration, "to provide written notice that included a general statement of the proposed action to the defendant . . . The plaintiff cannot and did not produce, during the two days of trial, one shred of [evidence showing that] it provided the defendant with prior written notice that a fine was under consideration." (Defendant's brief, p. 7.) Accordingly, she contends, the fine is unenforceable because of the lack of notice.
The plaintiff argues that it provided the defendant with proper notice in accordance with the governing documents and the Common Interest Ownership Act. In support of this contention, the plaintiff argues that it gave notice to the unit owner of the September 8 meeting in a letter dated August 16. It asserts that this notice stated that the power vent on the defendant's unit violated the governing documents and provided the date, time and location of the meeting, which the defendant attended. The plaintiff maintains that the defendant was advised, at the meeting, that the change to her power venter violated specific provisions of the documents and was warned of the potential for fines for the violations. It further maintains that it gave the defendant notice of a second opportunity to be heard at the December 8 meeting in a letter on November 23, which also provided the date, time and location of the meeting and specified the violations to be addressed. Relying on Stamford Landing Condominium Assn., Inc. v. Lerman, 109 Conn.App. 261, cert. denied, 289 Conn. 938 (2008), the plaintiff argues that under these facts the plaintiff complied with the requirements of General Statutes § 47-277(a)(11).
The plaintiff also argues that it complied with the notice and hearing process under the declaration and bylaws. It contends that "[§]23.2 of the Declaration required the Executive Board to give the Unit Owner written notice with a general statement of its proposed action and date, time, and place of the hearing. The Executive Board gave written notice to the Unit Owner by the mailing of Ms. Edwards' August 16 and November 23 letters . . . under [§]8.1 of the Bylaws. The general statement was that the furnace venter on the Unit violated the governing documents of the Common Interest Community. To the extent that the general statement in the notices did not advise the Unit Owner of the specific provisions of the governing documents that the furnace venter violated and that the Executive Board's ultimate action on the violations was the levying of fines, the Unit Owner received actual notice of this information when she attended the September 8 meeting . . ." (Plaintiff's brief, p. 13.) The plaintiff argues that under Stamford Landing Condominium Assn., Inc. v. Lerman, supra, 109 Conn.App. 261, and Twenty-Four Merrill Street Condominium Assn., Inc. v. Murray, 96 Conn.App. 616, courts give primary importance to actual notice, and that courts do not insist upon technical compliance with notice procedures when the affected party suffers no prejudice as a result of the noncompliance.
Based on the parties' arguments, the issue is whether a notice that states the nature of the violation, the date, the time and location of the hearing, but does not specifically state that fines could be imposed for the violation, is defective and invalidates the fines subsequently imposed. In Stamford Landing Condominium Assn., Inc. v. Lerman, supra, 109 Conn.App. 261, the Appellate Court upheld in that case, the trial court's determination that the plaintiff board had given the defendant unit owner proper notice and an opportunity to attend a hearing before levying fines against her. Id., 266. In that case, however, "the record indicate[d] that the plaintiff provided the defendant with sufficient notice of the impending daily fines as well as an opportunity to be heard" on the alleged violation. (Emphasis added.) Id., 266-67. The letter informed the defendant "that [her tenant] was keeping a dog in the unit in violation of the plaintiff's rules. The letter notified the defendant that if the dog was not removed from the premises by September 1, 2003, fines of $25 per day would be imposed." Id., 263. For this reason, the Court finds that the facts of Stamford Landing Condominium Assn., Inc. v. Lerman are distinguishable from those of the present case where, based on the parties' representations in their respective briefs, and the more credible evidence produced at trial, the notice did not include a statement that fines would be imposed as a result of the alleged violation.
Nevertheless, the reasoning of Stamford Landing Condominium Assn., Inc. v. Lerman is applicable to the present case. In that case, the Appellate Court explained: "`[T]he concept of notice concerns notions of fundamental fairness, affording parties the opportunity to be apprised when their interests are implicated in a given matter . . . Notice is not a rigid concept. Section 2 of the Restatement (Second) of Judgments, entitled "Adequate Notice" . . . explains that [t]he modern approach to notice-giving attaches primary importance to actual notice and treats technical compliance with notice procedures as a secondary consideration.'" Stamford Landing Condominium Assn., Inc. v. Lerman, supra, 109 Conn.App. 267, quoting Twenty-Four Merrill Street Condominium Assn., Inc. v. Murray, 96 Conn.App. 616, 622-23, 902 A.2d 24 (2006). In Stamford Landing Condominium Assn., Inc. v. Lerman, the defendant argued that the notice was inadequate because it failed to state the precise date, time and place of the November 3, 2003 board meeting. Id., 268. The Appellate Court reasoned that "[i]n light of the fact that the defendant was familiar with the location, layout and procedures of the village, the letters' omission of the exact time and location of the meeting was not problematic." Id. In the present case, the board's failure to provide notice to the defendant prior to the hearing of a possible fine does not completely invalidate the fine if the defendant received actual notice of the potential fines at the September 8 meeting, which she attended. Assuming that the plaintiff is correct in stating that the defendant was informed of the possibility of fines at the September 8 meeting, she received actual notice of the fines prior to the board levying those fines, which, under Stamford Landing Condominium Assn., Inc. v. Lerman, is of primary importance. Accordingly, it is held that the plaintiff board's failure to state that fines could be imposed in its notice to the defendant unit owner prior to the September 8, 2004 meeting does not invalidate its subsequent decision to impose such fines because the defendant had actual notice that such fines could be imposed if she was found to be in violation of the applicable rules, regulations and controlling documents.
The defendant further contends that she was not given notice that fines had been imposed until March 17, 2005, when the manager for the plaintiff informed the defendant that a fine of $2,475 had been levied against her. The court finds that the defendant's testimony and evidence on this point are more credible, and, therefore, the fines that have accrued through March 17, 2005 are invalid and should not be awarded to the plaintiff because the defendant did not receive notice that the $25 per day fine had been imposed prior to that date. In Stamford Landing Condominium Assn., Inc. v. Lerman, supra, 109 Conn.App. 267, the Appellate Court, in upholding the trial court's imposition of fines, noted that "the [trial] court's exclusion of all fines assessed prior to November 3, 2003 [the date of the hearing that the defendant did not attend, at which the board decided to continue to levy fines that had been imposed prior to the hearing] assures that the hearing requirement was satisfied prior to the levying of fines." Id., 267. Similarly, in the present case, to ensure that the notice requirement was satisfied prior to the levying of fines, the court finds that the fines levied prior to the date of March 17, 2005, when the defendant received notice that the plaintiff had decided to levy fines, are invalid.
The plaintiff's letter dated March 17, 2005, imposes a fine of $25.00 per day and implies that the defendant was given an open-ended period of time prior to March 17th to remediate the furnace vent condition before fines would be imposed upon her. The retroactive imposition of fines with this March 17th notice is neither fair nor equitable, and, furthermore, it does not comply with the legal constraints of the applicable law. The court, therefore, finds that the applicable period for the imposition of fines begins on March 17, 2005 and runs until June 20, 2005, when the offending galvanized pipe was replaced with a compliant vent hood. Based on the above findings and the applicable law, the court finds that a per diem fine of a diminished, but proportionate, amount can be imposed upon the defendant unit owner in the amount of $15 for each of the 128 days between and including March 17, 2005 through June 20, 2005. The total fine for that period of time is $1,400.00. The court holds in abeyance the assessment of any claimed legal fees, which far outweigh the violation of the governing documents as alleged by the plaintiff association. The court further holds in abeyance the setting of any law day(s) and/or a sale date that may attach to the priority lien, pending a current appraisal of the subject property. This delay gives the defendant unit owner time to pay the assessed fine along with some arrangement for the plaintiff's legal fees that shall be proportionate to the fine imposed.
The court reserves the right to review any other issues concerning the final resolution of this matter.