184 WINDSOR AVENUE, LLC v. STATE OF CONNECTICUT.

2004 Ct. Sup. 4518, 36 CLR 729
No. CVH-7060Connecticut Superior Court, Judicial District of Hartford, at Hartford Housing Session
April 1, 2004

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION RE: MOTION TO DISMISS
DOS SANTOS, JUDGE.

The defendant, State of Connecticut, seeks to dismiss this case brought by the plaintiff, 184 Windsor Avenue, LLC. The defendant contends that the Court lacks subject matter jurisdiction to hear the breach of lease claim because the Claims Commissioner has denied the plaintiff permission to sue the defendant. Further, the defendant asserts that to the extent that the plaintiff seeks declaratory relief, the defendant is barred by sovereign immunity because no valid property interest has been alleged by the plaintiff. In turn, the plaintiff contends that the doctrine of sovereign immunity does not bar this action.

The plaintiff is a limited liability company, successor to 184 Windsor Avenue Limited Partnership. The plaintiff’s predecessor entered into two leases with the defendant on or about May 20, 1998. The demised premises are Suites A and B which are occupied by the State Board of Education and Services for the Blind. Relying on the two leases, the plaintiff made substantial improvements to accommodate its tenant, the defendant. The leases had been prepared and approved by an assistant attorney general of the defendant. Each lease provides in paragraph 25 that the defendant would pay increases in real estate property taxes.

In its complaint, the plaintiff alleges that the defendant has failed to pay, as additional rent, certain real estate tax increases under the two leases between the parties. Further, the plaintiff alleges that it filed a claim with the Office of the Claims Commissioner who denied the plaintiff permission to sue the defendant because the lease clauses concerning additional rent for tax increases were invalid. The Claims Commissioner found, after a full hearing, that the tax escalation clauses were never approved by the State Properties Review Board (SPRB). CT Page 4519

After the denial of its claim by the Claims Commissioner, the plaintiff was advised that the General Assembly would receive the Claims Commissioner’s recommendation in the 2003 session. It also advised the plaintiff that the “General Assembly may accept, alter or reject the recommendation of the Claims Commissioner.”

The defendant argues that although the plaintiff had sufficient notice and opportunity to seek the General Assembly’s modification or rejection of the Claims Commissioner’s recommendation of denial of the claim, the plaintiff failed to pursue a remedy where many claimants have successfully prevailed over the Claims Commissioner’s rejection of their claim.

In its complaint, the plaintiff alleges that the defendant’s refusal to pay all sums due under the leases constitutes a breach of the lease agreements and a `taking’ of the plaintiff’s property without just compensation in violation of the Connecticut and United States constitutional guarantees.

In essence, the defendant asserts that because the plaintiff failed to exhaust available remedies, failed to obtain permission to sue from the Claims Commissioner, and failed to allege facts that could constitute a `taking’ under the state and federal constitutions, the doctrine of sovereign immunity bars the claim and, therefore, the Court lacks subject matter jurisdiction.

DISCUSSION
For the purpose of considering the defendant’s motion to dismiss, the Court accepts the allegations contained in the plaintiff’s complaint as having been proved by the plaintiff.

The doctrine of sovereign immunity, which holds that the state cannot be sued without its consent, “has its origin in the ancient common law.” Bergner v. State 144 Conn. 282, 284 (1957). The plaintiff asserts that this Court should not deny recourse to the plaintiff where the state refuses to comply with its own contractual undertakings pursuant to express statutory authority. The plaintiff contends that where the state enters into a valid contract, as was done here, and the plaintiff seeks to redress a breach of the state’s contractual obligation, the state has consented to being sued and had waived its sovereign immunity to the extent of its contractual obligations.

The plaintiff cites many cases where courts in other CT Page 4520 jurisdictions have judicially recognized that the state affected waives its sovereign immunity, including immunity from suit, when the affected state enters into a contract. These courts have recognized that relying on sovereign immunity to prevent a cause of action based on breach of contract undermines the basic principles regarding contracts. These courts have addressed the constitutional concerns about the relationship between government and its citizens. “Where the state has entered into a contract fairly authorized by the powers granted by general law, the defense of sovereign immunity will not protect the state from action arising from the state’s breach of contract.” Pan-Am Tobacco Corp. v. Department of Corrections, 471 So.2d 4, 5
(Fla. 1985). The rationale for these decisions is based on the notion of fairness: The state can sue directly for breach of contractual obligations without first obtaining permission to sue, and a private party should not be required to obtain consent from the state before the party can sue the state.

According to the defendant, the claim of breach of lease is barred by sovereign immunity. The defendant relies upon Connecticut General Statutes Section 4-160 which prohibits a suit of the defendant without permission from the Claims Commissioner and Section 4-159 which allows a suit of the defendant with the consent of the General Assembly. Sovereign immunity implicates subject matter jurisdiction and therefore is grounds for granting the Motion to Dismiss. Amore v. Frankel, 29 Conn. App. 565
(1992).

Conn. Gen. Stat. Section 4-142 grants jurisdiction to the Claims Commissioner of all claims against the defendant, except those claims that are specifically exempted. Section 4-141
defines a claim as “a petition for the payment . . . of money or for permission to sue the state”. Finally, Sec. 4-148(c) mandates that “no claim once considered by the Claims Commissioner . . . shall again be presented against the state in any manner.” Here, the plaintiff pursued the remedy provided by law and lost. Further, the plaintiff failed to pursue the avenue available at the General Assembly. The defendant asserts that because the breach of lease claim for additional rent related to the real property tax escalation clause in the lease has been determined, it cannot be re-litigated in the Superior Court.

The plaintiff contends that the defendant’s reliance on Section 4-148(c) is misplaced. The plaintiff asserts that Section 4-148(c) even if it were applicable to this case, embodies CT Page 4521 principles of res judicata and that a claim of res judicata
is not a jurisdictional claim, but instead a matter that is raised by special defense.

The doctrine of sovereign immunity is not available to the State as a defense to claims for just compensation arising under Article First, Section 11 of the Connecticut Constitution. Tamm v. Burns, 222 Conn. 280 (1992), Textron, Inc. v. Wood, 167 Conn. 334 (1974). Article First, Section 11 of the Connecticut Constitution provides: “The property of no person shall be taken for public use, without just compensation therefor.” A similar protection is contained in the Fifth Amendment to the United States Constitution. The plaintiff alleges that the defendant’s failure to pay rent due under the leases amounts to a `taking’ of the plaintiff’s property without just compensation. In its complaint, the plaintiff alleges that the defendant has occupied and continues to occupy the demised premises.

Here, the plaintiff seeks declaratory relief and damages. An action based on a taking without just compensation may avoid the defense of sovereign immunity where a property interest and constitutional taking are alleged, but only for equitable relief. In Miller v. Egan, 265 Conn. 301 (2003) our Supreme Court held that where damages are sought, even for violations of constitutional rights, a plaintiff must seek a waiver of sovereign immunity from the Claims Commissioner. The Court held that the exception to sovereign immunity for constitutional violations “does not apply . . . to claims against the state for monetary damages.” Miller at 315.

An option to purchase a piece of land included in a lease constitutes `property’. Texaco, Inc. v. Commissioner of Transportation, 34 Conn. Sup. 194 (1977) In order to constitute property, the option to purchase the land had to be real Texaco, supra. The defendant contends that no valid property interest has been alleged by the plaintiff. The Court agrees.

Additionally, the plaintiff seeks a declaratory judgment from the Court. The exception applies when state officials act unconstitutionally or in excess of their statutory authority Doe v. Heintz, 204 Conn. 17, 31 (1987) The plaintiff seeks a declaratory judgment concerning the validity and enforceability of the escalation clauses for increased taxes in the leases. It is the contention of the plaintiff that because the defendant continues to occupy the demised premises and refuses to pay the full rental amount for its occupancy of the plaintiff’s property, the defendant’s refusal to pay constitutes a `taking’.

The plaintiff asserts that the violation of constitutional rights cannot insulate the defendant from constitutional scrutiny by the courts and that the defendant cannot rely on Section 4-148(c) to insulate its unconstitutional conduct from judicial scrutiny.

CONCLUSION
The defendant’s Motion to Dismiss is granted. The property interest asserted by the plaintiff is a rent escalation clause that had been declared illegal and unenforceable by the Claims Commissioner. The plaintiff could have returned to the State Properties Review Board to have the modification in the lease approved. After the Claims Commissioner invalidated the escalation clause in the leases, the plaintiff could have sought assistance at the General Assembly. The Court does not consider the invalid lease term to be `property’ within the meaning of the proprietary protections afforded by the State and Federal Constitutions. Therefore, this case is barred by sovereign immunity.

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