Appellate Notes: Week of March 18, 2013

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Welcome to our Supreme and Appellate Court summaries webpage.  On this page, I provide abbreviated summaries of decisions from the Connecticut appellate courts which highlight important issues and developments in Connecticut law, and provide practical practice pointers to litigants.  I have been summarizing these court decisions internally for our firm for more than 10 years, and providing relevant highlights to my municipal and insurance practice clients for almost as long.  It was suggested that a wider audience might appreciate brief summaries of recent rulings that condense often long and confusing decisions down to their basic elements.  These summaries are limited to the civil litigation decisions based on my own particular field of practice, so you will not find distillations of the many criminal and matrimonial law decisions on this page.  I may from time to time add commentary, and may even criticize a decision’s reasoning. Such commentary is solely my opinion . . . and when mistakes of trial counsel are highlighted because they triggered a particular outcome, I will try to be mindful of the adage . . . “There but for the grace of God . . ..”  I hope the reader finds these summaries helpful. – Edward P. McCreery

Posted March 18, 2013

  • SC18921- Redding Life Care, Inc. v. Redding

In this tax assessment appeal, the Trial Court chose to disregard the owner’s expert’s opinion of value.  The owner had developed part of its 130 acres as a continuing care retirement community, with the undeveloped land preserved by a conservation easement.  Residents were offered a continuum of care starting with self-sufficiency in return for an admission fee and monthly service fees pursuant to a contract, with a partial refund upon death or withdrawal.  The town concluded that the property had an assessed value of $82 million.  The owner contended it should have an assessed value of $62 million.

One issue on appeal was whether or not the Court had improperly rejected the going concern income capitalization approach used by the owner’s expert.  Under this method the property is valued as if someone wanted to buy the existing business, taking into account depreciation of personal property, cash flows, expenses, etc.

The owner felt this methodology was necessary because even the Trial Court agreed that it is extremely difficult to value property dedicated to this type of business, where residents do not pay rent in a traditional sense.  The Trial Court felt the owner’s expert had oversimplified the complexity of trying to value property using this approach.  The Supreme Court held that the Trial Court’s rejection of the expert’s opinions was not a rejection of the method itself, but rather a criticism of the expert’s excessive depreciation of personal property and overly simplistic methods.

Lastly, the owner tried to claim that the property was excessively valued because the town relied upon incorrect material assumptions such as presuming the entrance fee would remain in escrow and generate up to $5 million a year in additional income . . . when in fact there was no such escrow.  This, however, was found to be simply the proper reliance upon hypothetical conditions often used in real estate appraisals.  In order to sustain an appeal in under C.G.S. § 12-119, the use of such evidence must amount to illegal conduct.  Relying upon hypotheticals does not rise to that level.  Justice Everleigh dissented on this point, noting that the town’s assessment was based on admittedly false and untrue assumptions, and he felt that the knowing use of false assumptions would qualify as an unacceptable valuation under C.G.S. § 12-119.  The majority disagreed, and held that the utilization of hypothetical conditions is an accepted means to determine value.  {Congratulations to our own Elliott Pollack and Tiffany Spinella on this case!}

SC18846- Bauer v. Bauer

Although this was a matrimonial case, it has a generally applicable civil holding.  A party moved for a clarification of the judgment as to how a pension was to be split. The judgment made reference to an agreement to split the pension but did not order such to happen.  The Trial Court modified its decision and on appeal it was held that while a trial court may issue further orders to clarify an ambiguous ruling, a motion to clarify may not be used to modify or alter the substantive terms of a prior judgment.  Only a motion to reopen the judgment may be utilized for such purpose. Here, however, the Trial Court merely reiterated previously found facts that included that the parties agreement to split the pension.  Those facts justified the modification.  This was not an improper modification of a judgment.

  • SC18947- State v. Charlotte Hungerford Hospital

This case left undecided whether the State’s Claims Commissioner has a right to subpoena hospital records to determine the viability of a claim against the State, even though the hospital was not a party to the claim proceedings.  The claimant resolved any claims against the State, and withdrew the proceedings before the Claims Commissioner.  That rendered all matters moot, including discovery against the hospital.

The moral of this story is to make sure you return a tenant’s security deposit, especially if the home is in New Canaan where people can afford to fight.  Here the tenant sued the landlord for failure to return her security deposit of $4,800 which the landlord spent.  Although the tenant demanded her security deposit back, the landlord asserted skeptical setoff damages, including $4,000 for traveling to Connecticut to inspect the property.  The tenant added claims for treble damages and CUTPA punitive damages.  During trial the landlord admitted that the only legitimate setoff was a $200 fuel bill and claimed his attorney had given him bad advice, …..which the attorney denied ever providing on the witness stand.  The Trial Court found that the defendant’s setoff damages were pre-textual, but did not award double damages allowed by statute because even though inadequate, the landlord had submitted a purported accounting of damages.  The amount of $3,000 in CUTPA damages and $2,500 attorney fees were awarded due to the commingling of the security deposit with personal funds.

Although the tenant prevailed, she appealed on the grounds that the Trial Court had not awarded sufficient damages.  The Supreme Court agreed finding the tenant was entitled to double damages on the security deposit.  A landlord cannot substitute a fabricated accounting of damages in an attempt to comply with their statutory duties.  A fabricated accounting does not amount to the written notice required under the statute.  Here, the defendant had complied with the statute in form only.  Additionally, the tenant was entitled to statutory interest not only on the unreturned security deposit, but also the last month’s rent paid in advance.  The tenant was not entitled, however, to treble damages for statutory theft.  To grind the landlord into the dirt, the tenant even wanted to delve into his finances but the decision held the Trial Court was not obligated to allow evidence of the financial wherewithal of the defendant to set punitives.  Finally, the Trial Court’s drastic 95% reduction in the amount of attorney’s fees to the tenant (from $45,000 to $2,500) was deemed an abuse of discretion.  The matter was remanded to recalculate the award of attorney’s fees.  So all in all, it looks like not returning that $5,000 might cost the landlord closer to $60,000+.  That was smart.

  • AC33764- Alarmax Distributors, Inc. v. New Canaan Alarm Co.

Distributor sold equipment to an alarm company on a credit agreement requiring payment within thirty days.  After the alarm company’s bookkeeper embezzled over $600,000, it defaulted on its $100,00 debt to the distributor.  The alarm company asserted a four-year statute of limitations defense under C.G.S. Section § 42a-2-725.  This decision held, however, that since the parties ignored the payment terms under the credit agreement, and instead kept an open account against which random payments were made, this amounted to the alarm company acknowledging the debt and a tolling the four-year statute of limitations.  Contrary to the alarm company’s contention, C.G.S. Section § 42a-2-725 can be tolled by the party’s conduct.  Here, the partial payments on the debt were made voluntarily and warranted an inference that the debtor recognized its obligation to pay the entirety of the debt.  Such acknowledgement, combined with the parties’ ignoring the thirty-day payment schedule over a fifteen year period, and instead allowing the debtor to have an open running account with periodic lump sum payments, amounted to a modification of the credit agreement.  The consequence, however, was that the creation of a new agreement precluded the distributor from relying upon the original credit agreement, including its finance charge provisions.  Accordingly, the award of the finance charge under the original credit agreement was set aside.

  • AC33997- Grissler v. Zoning Board of Appeals of New Canaan

When the homeowner’s daughter regularly came home from work and parked her flatbed truck from work in front of her parents’ house, the town issued a cease and desist order for the improper storage of a commercial vehicle.  After the Zoning Board of Appeals refused to set aside the violation, the owners appealed to the Superior Court.  In this decision, the Appellate Court agreed with the Superior Court that even though the New Canaan Zoning Regulations did not define the term “Storage," and even though the definition had not been subject to prior agency interpretation, the repeated and regular parking of a vehicle on the property on a consistent basis over a long period of time, could be deemed the equivalent of storage, even though each visit to the property was temporal in nature.  The Court noted that to hold otherwise, would make it too easy for a violator to evade the intent of the Statute by constantly moving a vehicle around or on and off the property.  So in New Canaan you better be careful with your tenants and your trucks.

  • AC34196- General Electric Capital Corp. v. Metz Family Enterprises, LLC

An exclusive New York forum selection clause in a promissory note made it unreasonable for a Connecticut Court to exercise jurisdiction over the borrower. Therefore, if the underlying complaint was not viable, the Connecticut Trial Court should not have granted a pre-judgment remedy application brought by the lender.

It looks like the plaintiff was attempting to ignore the forum selection clause, because it proved inconvenient when the defendant borrower and guarantors were principally located here in Connecticut.  In essence, the Court was saying you cannot ignore such clauses.  The decision to set aside the PJR seems ironic in that they were unsuccessful in their motion to dismiss the entire action on the same grounds, because the forum selection clause was only deemed to implicate venue, not personal jurisdiction.

  • AC34030- F.E. Crandall Disposal, Inc. v. Ledyard

Unsuccessful lowest bidder for a trash contract sued the successful (higher) bidder, the town and the mayor.  After the dismissal of their case for failure to make a prima facie case, the plaintiff appealed and the Appellate Court reversed due to the improper exclusion of evidence.  The plaintiff should have been allowed to put on evidence of the town’s alleged favoritism towards the higher bidder, based on how the higher bidder performed under its prior contract with the town, and how the town let it cut corners.  The Court noted that the law allows unsuccessful bidders in limited circumstances to have standing to challenge the award of a public contract where fraud, corruption or acts undermine the integrity of the bidding process.  The plaintiff should have been allowed to attempt to put on circumstantial evidence that the town impermissibly favored the higher bidder, and that such favoritism infected the integrity of the bidding process, particularly when the contract was not awarded to the lowest bidder.  Evidence of the high bidder’s violations of a previous contract which the town ignored, and that the town supposedly paid more under the prior contract than required, should have been admissible as circumstantial evidence.

Waterfront subdivision included a covenant recorded on the land records as to the location where structures must be built, and limitations on the height of vegetation.  When the vegetation on one lot started to block the view, the offended homeowners sued, claiming a violation of a visual easement.  The defendants claimed that the covenant was a private restriction, rather than a visual easement, and thus, the action was barred by the statute of limitations found in C.G.S. § 52-575(a).  The Trial Court agreed that the three-year statute of limitations had expired.  On appeal, the Appellate Court reversed, holding that the covenant created a visual easement.  Here, the covenant made specific reference to the term “visual easement," and in totality, evidenced an intent of the drafter that the restrictions were for the benefit of the rear lots to have a view over the defendant’s property.  The Appellate Court rejected the contention that in order to qualify as an “easement," there must also be included, language granting the dominant estate the right to enter and enforce the easement.  In this case, the easement was deemed to be a “negative easement” which does not authorize the owner of the dominant land to do anything; it simply prevents the servient owner from taking certain actions on their land they could otherwise perform.  A view easement is a traditional “negative easement."  The Court noted that negative easements are becoming more common, such as the need to have an unobstructed wind flow for wind energy projects or sunlight for solar energy projects.  Easements protecting historic properties are another form of negative easement, as are conservation easements.  (Ed's note - Interesting decision in that it could be argued some recent case law has held just the opposite.  This is a more logical result.)

Homeowner sued insurance company for not paying fully on a loss, and the insurance company counterclaimed for insurance fraud for the amount they had paid.  When being questioned about his finances, the Court, on its own initiative, warned the defendant of his Fifth Amendment rights outside the presence of the jury.  Thereafter, in front of the jury, the homeowner claimed his Fifth Amendment privilege , and refused to answer several questions.  The Trial Court later instructed the jury it could draw an adverse inference from such invocation of the privilege.  Nonetheless, the jury returned a verdict both for the plaintiff and for the defendant, awarding neither side any damages.  On appeal, the insurance company claimed that the Trial Court should not have preemptively advised the witness of his Fifth Amendment rights.  This decision held the insurance company failed to preserve this issue for appeal because it did not object to the Court’s advisement of the rights at the time they were given.  Merely raising it in a post-trial motion does not preserve the issue for appeal unless the matter arose subsequent to the trial.  The decision also noted that it was obvious that Safeco did not object at the time, because it felt the witness’ invocation of the privilege would be beneficial in front of the jury.  A party cannot take an appeal when a strategic decision backfires.  

AC33758- Wojtkiewicz v. Middlesex Hospital

The Trial Court properly concluded that once the patient discovers the alleged harm in a malpractice case, the statute of limitations is triggered and starts to run.  The statute of limitations is not tolled because the patient continues to be treated at the hospital.

The facts and holdings of any case may be redacted, paraphrased or condensed for ease of reading.  No summary can be an exact rendering of any decision, however, so interested readers are referred to the full decisions.  The docket number of each case is a hyperlink to the Connecticut Judicial Department online slip opinion.  ©2013 Pullman & Comley, LLC. All Rights Reserved.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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