AvalonBay Communities, Inc. v. Orange, (SC 16352)

• Court: Supreme Court of Connecticut
• Writing for the Court: BORDEN, J.
• Citation: 775 A.2d 284,256 Conn. 557
• Parties: AVALONBAY COMMUNITIES, INC., ET AL. v. TOWN OF ORANGE ET AL.
• Docket Number: (SC 16352)
• Decision Date: 10 July 2001

256 Conn. 557
775 A.2d 284

AVALONBAY COMMUNITIES, INC., ET AL.
v.
TOWN OF ORANGE ET AL

(SC 16352)

Supreme Court of Connecticut.

Argued February 16, 2001.

Officially released July 10, 2001.

Borden, Katz, Palmer, Vertefeuille and Zarella, JS.

256 Conn. 559

Timothy P. Pothin and Thomas R. Gerarde, with whom were Brian M. Stone and, on the brief, Hugh F. Keefe and I. Milton Widem, for the appellants-appellees (defendants)

Joseph P. Williams, with whom were Timothy S. Hollister and, on the brief, Christopher B. Carveth and Leo P. Carroll, for the appellees and the cross appellant (plaintiffs).

Wesley W. Horton filed a brief for the Connecticut Civil Liberties Union Foundation et al. as amici curiae.

Opinion

BORDEN, J.

The defendants¹ appeal² and the named plaintiff, AvalonBay Communities, Inc. (AvalonBay),

256 Conn. 560

cross appeals³ from the judgment of the trial court, Curran, J., rendered after a court trial, granting a permanent injunction in favor of the plaintiffs, Ernest Cuzzocreo, Jr., Cuzz-Acres Orange Limited Partnership (Cuzz-Acres) and AvalonBay. In their appeal, the defendants claim that the trial court improperly enjoined the town from: (1) implementing its plans for an industrial park (project plan) in the town, to be located on a parcel that included a parcel of real property owned by AvalonBay (AvalonBay parcel); and (2) proceeding with any plans for the taking by eminent domain of the AvalonBay parcel. In its cross appeal, AvalonBay claims that the trial court improperly concluded that the plaintiffs were not entitled to damages for any allegedly improper conduct by the town under federal and state fair housing laws. We conclude that: (1) the trial court properly enjoined the town from proceeding with the project plan; (2) the issue of the taking of the AvalonBay parcel has been rendered moot; and (3) the trial court properly found in favor of the defendants with respect to AvalonBay's fair housing claims. Accordingly, we affirm the judgment in part

The trial court found the following facts. In May, 1997, the plaintiffs entered into a contract whereby AvalonBay was to purchase a parcel of real property located in the town owned by Cuzzocreo and Cuzz-Acres, comprised of approximately 9.6 acres of land. At the time of the purchase agreement, the parcel was located in a district zoned light industrial, which specifically allowed planned residential developments, including affordable housing projects in accordance with General Statutes § 8-30g.⁴ Subsequently, in August,

256 Conn. 561

1997, AvalonBay filed applications for a wetlands permit and a special use permit, accompanied by a site plan, seeking approval to build on the parcel a luxury apartment complex, a percentage of which would qualify as affordable housing rental units. The town inland wetlands and watercourses commission denied AvalonBay's original and revised wetlands permit applications. The town plan and zoning commission denied AvalonBay's site plan and special use permit application, as well as its subsequent, modified application.⁵ Approximately three weeks after AvalonBay's application was filed, the plan and zoning commission issued a moratorium on all planned residential developments in the town, effective September 26, 1997. In April, 1998, while AvalonBay's appeal from that decision of the plan and zoning commission was pending,⁶ the town economic development commission hired the planning firm of DeCarlo & Doll, Inc., to draft a project plan for a high-tech industrial park that would occupy eighteen

256 Conn. 562

separate parcels of real property on a 172 acre plot in the town, which would include the AvalonBay parcel. In September, 1998, Orange Economic Development Corporation, Inc., a private corporate entity, was formed to oversee the proposed industrial park

Before the project plan was completed, plans were formed to take the parcel by eminent domain. In November, 1998, however, the voters of the town rejected the proposed issuance of bonds for the acquisition of the parcel. Plans for the industrial park, however, continued. In December, 1998, the board of selectmen passed a resolution for the issuance of bonds for the condemnation of the parcel. The project plan was approved by the economic development commission in January, 1999,⁷ and by the board of selectmen in February, 1999. On March 9, 1999, the plan to take the parcel by eminent domain was revived and approved by the economic development commission. The following day, the board of selectmen voted to condemn the parcel. At a town meeting on March 29, 1999, the taking of the AvalonBay parcel by eminent domain for its inclusion in the industrial park was approved. Additional facts will be provided as necessary.

The plaintiffs brought this action against the defendants, seeking a permanent injunction against the project plan and the taking of the AvalonBay parcel by eminent domain, and also seeking to recover damages from the town and various individual defendants.⁸ In the first count of a second amended five count complaint, the plaintiffs alleged that the defendants' proposed implementation of the project plan "violates §§ 7-136 and 7-148 and Chapters 132 or 588l of the General

256 Conn. 563

Statutes, does not constitute a bona fide plan for a municipal development project, constitutes a bad faith exercise of the authority granted to municipalities by these statutes, and constitutes ultra vires action by the Town and its agencies ...." In the second count of the amended complaint, the plaintiffs alleged that the intended condemnation of the parcel violated article first, § 11, of the Connecticut constitution,⁹ in that it was not being carried out to serve a public use. The plaintiffs also alleged that the intended condemnation constituted a bad faith exercise of the eminent domain power. The plaintiffs further alleged that the intended condemnation was unlawful because it was violative of several federal and state fair housing statutes. In the third count of the amended complaint, the plaintiffs alleged that the defendants violated certain federal and state fair housing laws. In the fourth count of the amended complaint, the plaintiffs sought to recover compensatory and punitive damages from Robert C. Sousa, the first selectman of the town, in his individual capacity, for tortious interference with business expectancies. The plaintiffs alleged that Sousa had been aware of the contract between AvalonBay as the purchaser and Cuzzocreo and Cuzz-Acres as the sellers of the parcel, and that he had acted outside the scope of his duties and employment as first selectman by improperly blocking the plaintiffs' residential development efforts. Finally, the fifth count of the amended complaint constituted a claim for indemnification of the plaintiffs by the town with respect to the third and fourth counts. The defendants asserted eight special defenses, which are not involved in this appeal.

On March 26, 1999, the defendants removed the action to the United States District Court for the District

256 Conn. 564

of Connecticut. That court concluded that the complaint failed to allege a substantial federal question, thereby depriving the court of subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Accordingly, the federal court remanded the action to the Superior Court pursuant to its authority under 28 U.S.C. § 1447 (c). The trial court issued a stay of the condemnation pending the resolution of the plaintiffs' application for an injunction.

After a court trial, the defendants moved to dismiss count two of the plaintiffs' second amended complaint for lack of subject matter jurisdiction on the ground of mootness. The defendants argued that count two, which sought an injunction against the taking of the parcel, was rendered moot because: (1) the town's authorization for the condemnation had expired in September, 1999; (2) the board of selectmen had determined that it was no longer in the town's best interest to acquire the parcel following a then recent reappraisal, and had resolved that it would not vote to acquire the parcel by eminent domain so long as AvalonBay owned the property; and (3) the economic development commission had resolved not to seek the acquisition of the parcel and to amend the project plan so as to delete the acquisition therefrom. In February, 2000, the trial court denied the defendants' motion to dismiss, reasoning that the resolution lacked the permanent force of a judgment and applied specifically to AvalonBay without taking into consideration future transfers of ownership.

At the same time, the trial court ruled on the merits of the case, concluding that, as a general matter, an industrial park, such as the one proposed by the town, may serve a public purpose for which the power of eminent domain could be exercised. Although the court found that there was no evidence that the property to be taken for the industrial park would be used for anything other than the stated purpose, the court also

256 Conn. 565

found that the town had proceeded in bad faith and that the project plan was a pretext in an effort to thwart affordable housing on the AvalonBay parcel. In making these findings, the court principally relied on the timing of and the sparsity of detail in the project plan, as well as the actions and statements of Sousa and other town officials.

On the basis of these findings, the trial court concluded, with respect to the first and second counts, that the plaintiffs were entitled to a permanent injunction prohibiting the town from proceeding with the implementation of the project plan and from proceeding with any plans for the condemnation of the subject property. With respect to the third count, the trial court concluded that the plaintiffs were not entitled to damages for any allegedly improper conduct by the town under either the federal or state fair housing laws. Accordingly, the trial court rendered judgment in...