2010 Ct. Sup. 12767
No. FST-CV-07-5004073-SConnecticut Superior Court Judicial District of Stamford-Norwalk at Stamford
June 22, 2010
MEMORANDUM OF DECISION
This case comes to this court as a courtside trial wherein foreclosure and other relief is sought against the defendant. The court has reviewed all of the exhibits, the findings of fact, the briefs of the parties and the evidence at trial in rendering this decision.
The Plaintiff, 25 Van Zant Street Condominium, Inc., (“25 Van Zant” or the “Plaintiff’) instituted the present action by way of writ, summons and complaint (the “Complaint”) on or about May 4, 2007. 25 Van Zant subsequently amended its complaint on or about April 27, 2009 (the “Amended Complaint”). Count One of the Amended Complaint, now the operative pleading, seeks foreclosure of a lien based upon the Defendant, Calvary Chapel of Norwalk, Inc.’s (“Calvary” or the “Defendant”) failure to pay various common charges, assessments, fees, interest and penalties from May 2005 to present. Count Two alleges breach of contract for Calvary’s failure to pay common charges, assessments, interest, fees and penalties associated with its use of its unit, its use of a rooftop antenna and its lack of a certificate of occupancy since August 1999.
On or about June 9, 2009, Calvary submitted an Answer, Special Defenses and Counterclaim. Count One of Calvary’s Counterclaim alleges, inter alia, abuse of process in that 25 Van Zant commenced the foreclosure action as a result of personal animus and/or desire for retribution. Calvary also asserts various special defenses focusing on a variety of allegations as to the fact that 25 Van Zant initiated an improper action to collect invalidly imposed common charges, special assessments, fee and penalties.
The court makes the following findings of fact:
1. 25 Van Zant St. is a commercial condominium located at 25 Van Zant St., Norwalk, Connecticut (the “Property” or the “Condominium”).
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2. The Property was declared a condominium in 1978.
3. The affairs of the condominium are operated by the 25 Van Zant St. Condominium Association (the “Association”).
4. The Association is governed by a Board of Directors (the “Board”) consisting of five persons.
5. The Association is operated in accordance with the Declaration of Condominium (the “Declaration”), Bylaws of 25 Van Zant Street Condominium Association (the “Bylaws”) and Rules and Regulations (“Rules”).
6. Pursuant to article XIV of the Declarations, all unit owners are subject to all provisions of the Declaration, Bylaws and Rules.
7. Article IV, Section 2 of the Bylaws states that the powers and duties of the Board include:
a. The operation, care, upkeep and maintenance of the common areas;
b. Determining the common expenses required for the affairs of the Condominium;
c. The collection of the common charges from the unit owners;
d. The making of repairs, additions of, improvements to or alterations to and restoration of the property.
8. Winthrop Baum (“Mr. Baum”) is the President of the Board and Building Manager.
9. As Building Manager, Mr. Baum is responsible for tenant safety, oversight of employees, enforcement of condominium rules and regulations, and the collection of common charges and special assessments.
10. As Building Manager, Mr. Baum is responsible for keeping records of payment of common charges, CT Page 12769 special assessments, mailbox fees, and other fees owed by unit owners.
11. The Property is an approximately 265,000 square foot building consisting of approximately 68 or 69 condominium units (the “Units”).
12. There are six separate and distinct owners of the Units.
13. There are approximately thirty-five different tenants occupying the Units.
14. The daily population of the Property fluctuates between four hundred and five hundred people.
15. The tenants’ uses of the Units vary from financial services to visiting nurse services to a baseball training facility.
16. The Defendant, Calvary Chapel of Norwalk, Inc. (“Calvary”) owns 25 Van Zant St., Unit #4 (“Unit 4”), a six thousand three hundred and eighteen (6318) square foot basement unit.
17. Calvary purchased Unit 4 from Charles Schemera on or about August 4, 1999 for one hundred and seventy thousand dollars ($170,000.00).
18. Article VIII, § 1 of the Bylaws provides that all units in the Condominium shall be used for Industrial and Office Purposes only, unless express permission for an alternate use is obtained from the Board.
19. Calvary uses Unit 4 as a place of assembly.
20. While the Bylaws do not allow for the use of any unit as a place of assembly, or church, permission was given for this use.
21. The parties stipulated that the present fair market value of Unit 4 is two hundred fifty thousand dollars ($250,000.00).
22. Article VII, § 2 of the Association’s Bylaws (the CT Page 12770 “Bylaws”), obligates all unit owners to pay the common charges assessed by the Board monthly or at such other time or times as the Board shall determine.
23. Article VII, § 7 of the Bylaws entitled “Default in Payment of Common Charges” provides for payment of interest at the rate of twelve percent per annum in the event of a default of any unit owner in paying common charges.
24. A unit owner’s failure to pay its common charges by the 10th of the month also results in the imposition of five percent (5%) late fee.
25. From the time of Calvary’s purchase of Unit 4 to January 1, 2001, the Association charged two dollars and ten cents ($2.10) per square foot in common charges.
26. From January 1, 2001 to present the Association charged two dollars and sixty cents ($2.60) per square foot for common charges.
27. As a unit owner, Calvary is responsible for monthly payment of common charges and antenna fees.
28. Calvary paid its monthly common charges in a timely manner for a period of approximately seven months, from August 1999 to March 2000.
29. On March 24, 2000, Calvary’s payment for monthly charges was returned for insufficient funds.
30. From March 2000 to present, there have been periods when Calvary’s payments have been sporadic or nonexistent, at times missing entire months of payments and at other times failing to pay the full amount due and owing.
31. Due to Calvary’s sporadic and/or non-payment, in April 2000, Calvary began to carry an accrued balance of charges some of that remains due and owing as of the date of the trial of this matter.
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32. The Association maintains a central mail area for its unit owners to receive mail.
33. The Association charges a fee for the use of a mailbox. The yearly mailbox fees for small, medium, and large mailboxes are two hundred and seventy five dollars ($275), three hundred and fifty dollars ($350), and four hundred dollars ($400) respectively.
34. Calvary did not have a mailbox at the Property.
35. The Bylaws prohibit the use of antennas without express permission of Board.
36. The Association permitted Calvary to install a radio antenna (“Calvary’s antenna”) on the roof of the property in exchange for the payment of a fee of one hundred dollars ($100) per month (the “antenna fee”).
37. The Association began charging Calvary an additional fee for the antenna on January 1, 2001.
38. The antenna was broken and not functioning in July 2007, thereafter no charges were due.
39. The Board’s power and duty to make repairs, additions, improvement, alterations or restorations includes the ability to pass special assessments for the raising of capital funds to fund the same.
40. Unit owners are notified of special assessments by way of letter explaining the cost and intended purpose.
41. On December 22, 1999, the Board passed a special assessment (the “1999 Special Assessment”) in the amount of fifty thousand dollars ($50,000.00) primarily for the purposes of performing a general renovation of the Property’s rear lobby.
42. Calvary’s share of the 1999 Special Assessment was one thousand three hundred seventy-eight dollars and one cent ($1,378.01).
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43. In 2001, the Board passed a special assessment in the amount of one hundred sixty-five thousand ($165,000.00) dollars primarily for the purposes of performing a general renovation of the Property’s front lobby.
44. On November 22, 2006, the Board passed a special assessment in the amount of four hundred fifty thousand dollars ($450,000.00) for the purposes of replacing one of the Property’s elevator cabs and mechanicals, refurbishment of the roof, and refurbishment of lobby bathrooms.
45. Calvary’s share of this special assessment was twelve thousand four hundred and two dollars ($12,402.00).
46. The Association expended funds toward the intended purposes of the various Special Assessments.
47. Article X, Paragraph 10 of the Declaration provides the Board with the power to levy fines for violations of the Condominium’s regulations provided that the fine for a single violation may not, under any circumstances, exceed $100.
48. Article X, Paragraph 10 of the Declaration also provides that for each day a violation continues after notice, it shall be considered a separate violation.
49. On August 29, 2008 counsel for the Association sent a letter to counsel for Calvary, advising that a certificate of occupancy was required immediately. The letter further advised that the Association would take necessary action to keep the Property safe for all owners, tenants, and their clients.
50. The Association began imposing a fine of $100 per day on August 29, 2008.
51. The parties agree that the time span from August 29, 2008 to October 20, 2009 is four hundred and sixteen (416) days.
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52. Plaintiff claims Calvary owes a fine of $41,600.00 as a result of its failure to obtain a certificate of occupancy as required by the Bylaws. Calvary denies the claim.
53. Article VII, § 7 of the Bylaws allows for the collection of reasonable attorneys fees incurred by the Association in any proceeding brought to collect unpaid common charges.
54. Article VII, § 7 of the Bylaws further provides that the Association shall attempt to recover unpaid common charges, together with interest thereon, and the expenses of the proceeding including such attorneys fees by foreclosure of the lien on such unit under powers granted by the Unit Ownership Act.
55. Article X, Paragraph 10 of the Declaration further provides that any fine so levied is to be considered as a common charge to be levied against the particular Unit Owner involved, and collections may be enforced by the Board of Directors in the same manner as they are entitled to enforce collections of common charges.
56. On or about January 12, 2007, the Association recorded a notice of lien for unpaid common charges and late fees.
57. On or about May 4, 2007, having not received the amounts claimed to be due and owing for common charges, late fees, antenna fees, penalties and special assessments, the Association instituted the present action.
The court finds that the more credible evidence is that the defendants never had a mail box, and accordingly should not have been charged. The court further finds that the bill for the antenna should have ended when the antenna was broken and not repaired thereafter.
The Association is also seeking $41,600 for a fine of $100 per day from August 2008 until October 2009, a total of 416 days. This is allegedly for Calvary’s Chapel failure to have a certificate of occupancy. The Bylaw that is relied upon is in Exhibit D-15 at pages 23 and 24.
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Plaintiff cannot invoke the Condominium Bylaws to collect a penalty charge of $100.00 per day for defendant’s failure to have a Certificate of Occupancy (i.e., from August 2008 to the present). The Bylaws state inter alia, in Article VIII, Section 4(d) that the Board of Directors of the Association have the right “to levy summary charges against a Unit Owner for such violation [i.e., a violation of the Rules and Regulations or Bylaws of the Association action] . . . provided that no summary charge may be levied for more than $100.00 for any one violation; but for each day a violation continues after notice, it shall be considered a separate violation.” This provision contemplates a violation of the Rules/Regulation and/or Bylaws, which has not been established by the plaintiff, and after notice of said violation a refusal to cure, all of which have not been established by the Association.
Similarly, the Common Interest Ownership Act addresses the issue of limitation regarding the imposition of charges or fines by the Association on a Unit Owner. Conn. Gen. Stat. Section 47-244(a)(11) of the Common Interest Ownership Act provides: “[The association may] . . . impose charges or interest or both for late payment of assessments and after notice and an opportunity to be heard, levy reasonable fines for violations of the declarations, bylaws, rules and regulations or the association.”
There was not any notice provided to Cavalry Chapel (except after it received answers to its interrogatories); nor was it provided with an opportunity to be heard on the issue of the $100.00 per day fine. Further, there was not any Special Meeting called by the Association to rule on this issue, despite the fact that it had never before issued such a fine in its history.
The $100 per day is not collectible.
The court finds the antenna was broken as of July 2007.
The court finds that Exhibit 32 is the basis of the plaintiff’s claim. Since the antenna has been excluded in part, and the mailbox claim excluded as set forth above, those totals are incorrect.
Attorneys fees are limited to proceedings brought to collect unpaid common charges.
The Association cannot invoke its own Bylaws to collect “combined” attorneys fees (i.e., attorneys fees that are not strictly related to the foreclosure case but arise out of legal services provided in an unrelated property damage case, prejudgment remedy application, injunctive action, CT Page 12775 as to criminal complaints against Pastor Paul Juchniewich, and general legal and corporate work performed for the Association’s counsel). The Bylaws only permit recovery, upon default, for “reasonable attorneys fees incurred by the Association in any proceeding brought to collect such unpaid charges.” See Bylaws, Article VII, Section 7.
As stated in Kastens v. Caswell Cove Marina, 2007 Conn.Super. LEXIS 1736
(2007), which also addresses the issue of the recovery of attorneys fees in a strict foreclosure case by a condominium association:
An issue was raised during oral argument as to whether the Applicant’s counsel had and/or could separate the attorneys fees that were incurred by the Applicant in prosecuting the counterclaim [seeking unpaid common charges from the unit owner] versus the fees incurred in defending the original cause of action. Although the Applicant argues that it could be extremely difficult or “impossible” to separate the fees into separate categories, the court is concerned about the possibility of the Applicant recovering fees for portions of their cause of action that does not entitle a party to recover attorneys fees. For this reason the court is not satisfied that the Applicant has met its burden of proof as to probable cause on the issue of damages.
In this instance, the issue of separating the fees into different categories is not that difficult. The court finds that the majority of attorneys fees sought by 25 Van Zant Street Condominium Association arise out of totally unrelated matters than this strict foreclosure case. Reasonable attorneys fees for the foreclosure are $16,000.
The court has reviewed the claim for attorneys fees. The court finds the plaintiff sought a blended rate of $125 to $375 per hour depending upon who was working on the file. The court finds that under Article 7 Section 7 reasonable attorneys fees to be paid by the defendant to the plaintiff is $16,000. The court finds that a fair hourly rate for the work done was $200 per hour and that a fair amount of time to collect the common charges was 80 hours thus the $16,000 attorneys fees order.
The amounts claimed by the plaintiff have fluctuated substantially.
Between January 2007 and the trial of this matter (January 21-22, 2010) the Association’s lien claim figure has fluctuated; to wit: (a) January 12, 2007; Notice of Lien-$39,530.99; (b) May 4, 2007; original foreclosure complaint-$57,326.49; (c) July 16, 2007; first amended foreclosure complaint-$35,326.49; (d) September 11, 2008; Application for Prejudgment Remedy and Baum Affidavit-$114,473.00; (e) September 11, 2008; Application for PTR and First Matrix-$82,223.81; (f) May 7, 2009; CT Page 12776 Association’s Supplemental Discovery Answers-$149,351.26; (g) April 27, 2009; Second Amended Foreclosure complaint-$89,386.95; (h) July 6, 2009; Plaintiffs Affidavit of Debt-$95,394.14; (i) First Day of Trial-$218,000.00; and (j) Second Day of Trial -$245,990.35. See Trial Exhibits D-1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12; statement of Brian Smith, Esquire (Day 1) and trial testimony by Baum, page 39 (Day 2).
Because of the variations and the court’s rulings concerning the antenna and the mailbox, it is not possible for this court to find that the penalties were properly allocated, and that the interest was properly computed. The court has done a simple calculation of what the claims are for the amounts due, which is $194,410.24 including antenna charges to July 2007 the amount paid was $148,404.46. That means the amount due the plaintiff by the defendant is $46,005.78. The court awards that amount.
Since this spreadsheet Ex. 32 does not assist the court in finding the amount of interest and penalties, no interest and penalties are awarded. The plaintiff has failed to meet its burden of proof as to these amounts.
Count One of Calvary’s counterclaim alleges abuse of process. A successful claim for abuse of process requires a showing that the opposing party used a legal process in an improper manner or to accomplish a purpose for which it was not designed. Mozzochi v. Beck, 204 Conn. 490, 494, 529 A.2d 171, 173 (1987). Broken down into individual elements, the plaintiff must show (1) a person used; (2) legal process, whether criminal or civil; (3) against another party; (4) primarily to accomplish a purpose for which it is not designed and; (5) caused harm to the party; (6) by the abuse of process. Fedor v. Hawley 2007 WL 1195290, 5
(Conn.Super. 2007) [43 Conn. L. Rptr. 233].
“[T]he gravamen of the action for abuse of process is the use of `a legal process . . . against another primarily to accomplish a purpose for which it is not designed . . .'” Mozzochi, at 494. (Emphasis added). The addition of the term “primarily” is meant to exclude liability “when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant.” Id. While Calvary Chapel cites spite, retribution and personal animus as the basis for 25 Van Zant’s foreclosure action, it failed to show that such motives are the primary purpose for the filing of the action. 25 Van Zant cites AEB, Inc. v. Tate Renner, 2008 WL 4308154, 1 (Conn.Super. 2008) and Bernhard-Thomas Bldg. Systems, Inc. v. Dunican, 2006 WL 301908, 3 (Conn.Super.,2006), for the proposition that even if there is an ulterior motive, it must be the primary purpose for the action. The mere existence of an incidental motive CT Page 12777 of spite or an ulterior purpose of benefit to the defendant is not sufficient to constitute a cause of action for abuse of process.”Id., at 3. As evidenced by 25 Van Zant’s claims of amounts owed and amounts paid by Calvary, the primary purpose for the foreclosure action is clearly the recovery of monies owed.
Even if some personal animus exists, such factors, at most, fall under the category of incidental motive, as opposed to primary purpose. The allegation that there was personal animus, spite or desire for retribution, even when viewed in its most favorable light, fails to establish that the primary purpose of the foreclosure action is anything other than securing a foreclosure to satisfy debts owed, a proper purpose under the law. As such, Count One of Calvary Chapel’s counterclaim is insufficient as a matter of law. Furthermore, there was insufficient credible evidence presented by the defendant at trial to support the claim.
Count Two of Calvary’s Counterclaim alleges a Breach of Duty to Act in Good Faith and Fair Dealing. “The implied covenant of good faith and fair dealing requires faithfulness to an agreed common purpose and consistency with the justified expectation of the other party in the performance of every contract.” Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 16, 728 A.2d 1114 (1999). The common-law duty of good faith and fair dealing implicit in every contract requires that neither party [will] do anything that will injure the right of the other to receive the benefits of the agreement . . . Essentially it is a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended.” Elm Street Builders, Inc. v. Enterprise Park Condominium Assn., Inc., 63 Conn.App. 657, 665, 778 A.2d 237 (2001). Calvary failed to show any manner in which the Association has failed to act in a manner consistent with its justified expectation or that it has done something to injure Calvary. The Association’s failure to act would have, in fact, been a breach of its duty to other unit owners.
Accordingly, the court enters the orders as set forth above for the plaintiff. The court finds the defendant has not proved the counterclaim.
The court finds the value of the condominium to be $250,000. The court enters a judgment of foreclosure by sale. See court order.
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