Boardwalk Realty Assocs., LLC v. M & S Gateway Assocs., LLC

• Decision Date: 13 August 2021
• Docket Number: SC 20395
• Citation: 263 A.3d 87,340 Conn. 115
• Parties: BOARDWALK REALTY ASSOCIATES, LLC v. M & S GATEWAY ASSOCIATES, LLC, et al.
• Court: Connecticut Supreme Court

340 Conn. 115

263 A.3d 87

BOARDWALK REALTY ASSOCIATES, LLC

v.M & S GATEWAY ASSOCIATES, LLC, et al.

SC 20395

Supreme Court of Connecticut.

Argued November 23, 2020

Officially released August 13, 2021^*

Kenneth R. Slater, Jr., with whom was Logan A. Carducci, Hartford, for the appellant (plaintiff).

Eric H. Rothauser, with whom were Jay B. Weintraub and, on the brief, John L. Bonee III, West Hartford, for the appellees (defendants).

Robinson, C. J., and McDonald, D'Auria, Mullins, Kahn, Ecker and Keller, Js.

ROBINSON, C. J.

This appeal is the most recent battle in the efforts of the town of Canton (town) to collect unpaid property taxes on a parcel of commercial real property (property) that was effectively abandoned in 2001 by its owner, Cadle Properties of Connecticut, Inc. (Cadle), and on which the defendants, M & S Gateway Associates, LLC (Gateway) and Mitchell Volkswagen, LLC (Mitchell),¹ have operated an automobile dealership since 1995. The plaintiff, Boardwalk Realty Associates, LLC, which is the court-appointed receiver of rents pursuant to General Statutes § 12-163a,² appeals³ from the trial court's judgment, rendered in accordance with the court's granting of the defendants’ motion for summary judgment with respect to the plaintiff's complaint seeking rent, as well as use and occupancy payments, from the defendants. On appeal, the plaintiff contends that the trial court incorrectly concluded that the plaintiff lacked authority under § 12-163a to impose and collect rent or use and occupancy payments in the place of Cadle, the tax delinquent owner that effectively abandoned the property in 2001. We conclude that a receiver appointed under § 12-163a is not statutorily authorized to impose and collect rent or use and occupancy payments under the circumstances of this case, when the property has been abandoned by the owner prior to the appointment of the receiver and there is no existing obligation for the receiver to enforce. Accordingly, we affirm the judgment of the trial court.

The record reveals the following undisputed facts and procedural history, much of which is set forth in previous decisions of this court and the Appellate Court in prior appeals considering other aspects of this long running dispute. Cadle owns the property, which is located at 51 Albany Turnpike in Canton. In October, 1995, Cadle leased the property to Gateway for a three year term from November 1, 1995, through October 31, 1998, with Gateway having an option to renew for a second three year period. Gateway exercised its renewal rights, which extended the lease for a second three year term that terminated on October 31, 2001. In addition to rent payments, the lease required that Gateway pay the town all property taxes levied and assessed against the property during the lease term.⁴

In December, 1995, Mitchell, which is owned by Gateway, entered into a sublease agreement with Gateway for the rental of the property. That sublease incorporated the initial term, the renewal/second term, the rent structure, and the taxation obligations of the lease between Gateway and Cadle. Mitchell has operated an automobile dealership on the property since October, 1995, despite the expiration of the Gateway lease in 2001.

During the late 1990s, Cadle was subject to an enforcement action brought in the Superior Court by the Department of Environmental Protection (department) involving the property's contaminated soil and groundwater. On December 4, 2000, the Superior Court ordered Cadle to comply with the department's pollution abatement order and assessed a civil penalty of $2,143,000 against Cadle. See Canton v. Cadle Properties of Connecticut, Inc. , 188 Conn. App. 36, 40 n.4, 204 A.3d 62 (2019), citing Holbrook v. Cadle Properties of Connecticut, Inc. , Superior Court, judicial district of Hartford, Docket No. CV-97-0567429-S, 2000 WL 1872041 (December 4, 2000) (29 Conn. L. Rptr. 167). That order also prohibited Cadle "from conveying any interest in the ... property ... until all contaminated soil and ... groundwater ... ha[d] been fully remediated," and required Cadle to turn over to the state of Connecticut all rent payments (1) that had been received from Gateway and held in escrow pursuant to a prejudgment remedy, and (2) forthcoming from Gateway for the remainder of the extended lease term. Holbrook v. Cadle Properties of Connecticut, Inc. , supra, 29 Conn. L. Rptr. at 177. After the entry of that order, "Cadle took no further steps to manage the property" and, since the termination date of the lease on October 31, 2001, has not (1) demanded any payments from Gateway under the lease, (2) demanded or requested use or occupancy payments from Gateway or any other party, (3) advertised the property for a new tenancy, (4) commenced an eviction action against Gateway or any other party, or (5) paid for "any repairs, maintenance or improvements to the property." Mitchell continues to occupy the property and operate its automobile dealership to date; Gateway has not made any rent or use and occupancy payments to Cadle, or paid any real property taxes to the town on the property.⁵

"After Cadle effectively abandoned the property ... the town ... filed a petition [in April, 2011], seeking the appointment of a receiver of rents pursuant to § 12-163a. The petition alleged that Cadle had failed to pay real property taxes due to the town in the amount of $362,788.59, plus interest and lien penalties, for a total amount due of $884,263.04.⁶ The petition further alleged that, during all relevant periods, the property was occupied by a Volkswagen dealership owned by [the defendants], which had a legal obligation to pay rent to Cadle. The court, having found that Cadle owed the town taxes ... granted the petition to appoint the [plaintiff as] receiver [in June, 2011], and issued orders authorizing the receiver to collect all rents or use and occupancy payments due with respect to the property." (Footnote in original; footnote omitted; internal quotation marks omitted.) Canton v. Cadle Properties of Connecticut, Inc. , supra, 188 Conn. App. at 40–41, 204 A.3d 62.

Subsequently, the plaintiff served Gateway "with a notice to quit possession of the property on the ground of nonpayment of rent, [and Gateway] filed a motion to intervene in the town's action against Cadle in order to challenge the [plaintiff's] authority to take legal action against it. Shortly thereafter, the [plaintiff] filed a motion to modify the receivership order to authorize it to pursue an eviction of [Gateway] in the event of nonpayment of rent, to lease the property to a new tenant, and to use all legal process to collect back rent. Prior to acting on [Gateway's] pending motion to intervene, the court granted the [plaintiff's] motion to modify without objection.

"Subsequently, the trial court granted [Gateway's] motion to intervene in the action. [Gateway] then filed a motion to remove the [plaintiff as] receiver, asserting, inter alia, that the [plaintiff] had exceeded its authority under § 12-163a by serving it with a notice to quit and by bringing an action to collect back taxes and prior rents. The court denied the motion for removal ...." (Internal quotation marks omitted.) Id. at 41, 204 A.3d 62. In a subsequent appeal, we upheld the denial of Gateway's motion to remove the plaintiff as receiver but concluded that the plaintiff's authority under § 12-163a was limited to the "use [of] legal process to collect [past due] rent"; it did not have the authority to evict a tenant from the property or to lease the property to a new tenant.⁷

Canton v. Cadle Properties of Connecticut, Inc. , 316 Conn. 851, 853, 114 A.3d 1191 (2015).

In August, 2016, the plaintiff filed an amended complaint, seeking rent or use and occupancy payments⁸ from the defendants in the amount of $1,349,648, plus attorney's fees. After the defendants answered the amended complaint by denying that they owed rent or use and occupancy payments to Cadle at any point since 2001,⁹ the parties filed separate motions for summary judgment. The defendants contended that the plaintiff, as a receiver of rents appointed under § 12-163a, has no authority to seek rent or use and occupancy payments with respect to an abandoned property. The plaintiff argued that, to the contrary, despite the expiration of the lease with Cadle, the defendants remained in possession as "tenants" of the property, either at will or at sufferance, and the plaintiff was therefore entitled to seek use and occupancy payments.

The trial court granted the defendants’ motion for summary judgment and denied the plaintiff's motion. The trial court agreed with the defendants’ argument that our decision in Canton v. Cadle Properties of Connecticut, Inc. , supra, 316 Conn. 851, 114 A.3d 1191, which held that a receiver of rents under § 12-163a was not authorized to evict a tenant based on nonpayment of rent, placed "very strict limits on what a receiver of rents appointed pursuant to that statute may do to collect rents." The trial court concluded that "Cadle's conduct in abandoning the property—thereby not pursuing any of its rights as against these defendants—inadvertently allowed these defendants to live on the property without payment. Under these unusual circumstances, there is no ‘rent’ for the receiver to collect." The trial court emphasized that the plaintiff was bound by "the consequences of Cadle's abandonment of the property in 2001," insofar as the defendants’ lease with Cadle lacked "holdover provisions, which, after the lease expired, would (1) have defined the defendants’ status on the property, and (2) have set forth the tenants’ payment obligations while in this status." Accordingly, the trial court rendered judgment for the defendants as to the entire amended complaint. This appeal followed.

On appeal, the plaintiff contends that the trial court incorrectly concluded that § 12-163a does not permit a receiver of rents to collect rent or use and...