CANTONBURY HEIGHTS v. LOCAL LAND DEV.

• Decision Date: 24 May 2005
• Docket Number: No. 17274.,17274.
• Citation: 873 A.2d 898,273 Conn. 724
• Court: Connecticut Supreme Court
• Parties: CANTONBURY HEIGHTS CONDOMINIUM ASSOCIATION, INC. v. LOCAL LAND DEVELOPMENT, LLC, et al.

873 A.2d 898

273 Conn. 724

CANTONBURY HEIGHTS CONDOMINIUM ASSOCIATION, INC. v. LOCAL LAND DEVELOPMENT, LLC, et al.

No. 17274.

Supreme Court of Connecticut.

Argued January 10, 2005.

Decided May 24, 2005.

Thomas C. Clark, with whom was Melicent B. Thompson, Avon, for the appellant (plaintiff).

Everett E. Newton, Hartford, with whom, on the brief, was Dena M. Castricone, New Haven, for the appellee (named defendant).

Robert G. Clemente, with whom, on the brief, was Lorinda S. Coon, Hartford, for the appellee (defendant Supreme Industries, Inc.).

BORDEN, NORCOTT, PALMER, VERTEFEUILLE and ZARELLA, Js.

BORDEN, J.

This appeal involves the proper interpretation of a particular clause of the declaration¹ for Cantonbury Heights, a common interest community created pursuant to the Common Interest Ownership Act (act), General Statutes § 47-200 et seq.² The plaintiff, Cantonbury Heights Condominium Association, Inc., appeals from the trial court's grant of summary judgment in favor of the defendants, Local Land Development, LLC, and Supreme Industries, Inc.³ The plaintiff contends that the trial court improperly interpreted the declaration. We reverse the judgment in part.

The plaintiff brought this eight count complaint: (1) seeking to quiet and settle title to undeveloped real property in the common interest community; (2) alleging trespass on the real property; (3) alleging negligence with respect to the defendants' title search and work on the real property; (4) seeking indemnification from the defendants for any costs arising from environmental law violations caused by the defendants' actions on that real property; (5) alleging that the defendants' actions constituted conversion; (6) alleging that the defendants' actions constituted unjust enrichment; (7) alleging that the defendants' actions constituted statutory theft; and (8) alleging that the defendants' actions constituted unfair trade practices. The plaintiff sought temporary and permanent injunctions to prevent the defendant from exercising any rights with respect to the property, as well as damages for the defendants' actions to that point. After the trial court denied the plaintiff's motion for a temporary injunction, the plaintiff moved to reargue. Following several hearings, the trial court reaffirmed its prior decision and denied the permanent injunction as well. The defendants then moved for summary judgment, which the trial court granted as to all counts of the complaint. This appeal followed.⁴

The following facts and procedural history are undisputed for the purposes of this appeal. Cantonbury Development Limited Partnership, the original developer of the condominium complex known as Cantonbury Heights, filed an initial declaration establishing nine condominium units with associated common elements and reserving to itself certain special declarant rights, including the authority to exercise development rights. Those development rights included the right to create up to 132 additional condominium units. Cantonbury Development Limited Partnership subsequently transferred the special declarant rights to Cantonbury Heights Associates, which exercised certain of those rights to bring the total number of units built to sixty-seven before financial difficulties forced it to assign the rights, along with ownership of two unsold units, to Mechanics Savings Bank. Mechanics Savings Bank sold the two units it owned before executing a quit claim deed to transfer the special declarant rights to General Financial Services, Inc.

After acquiring the special declarant rights from General Financial Services, Inc., by quit claim deed, the defendant received approval from the Canton zoning commission to construct sixty-three additional condominium units in those areas designated as Phase III and Phase IV on the Cantonbury Heights site plan. In preparation for construction, Moosehead Land Clearing removed trees and other material from the area to be developed pursuant to a contract with the defendant. The defendant also contracted with West Central Enterprises, Inc., to perform excavation work in the area and with Supreme to perform site preparation work.

Before the defendant could proceed further, town authorities halted the site preparation efforts, and state authorities cited the defendant for violation of environmental laws. First, the town of Canton issued an order to cease and desist excavation and grading operations because those operations may have been causing soil erosion into wetlands and watercourses both on and off the construction site at Cantonbury Heights. The town also claimed that the defendant had failed to comply with the terms and conditions of a permit issued by the Canton inland wetlands and watercourses agency and to construct improvements in accordance with approved drawings. Shortly thereafter, the Connecticut department of environmental protection issued a notice of violation, in which it claimed that the defendant had violated certain provisions of the general permit for the discharge of stormwater and dewatering wastewaters associated with construction activities. Then, the Canton inland wetlands and watercourses agency issued a revised cease and desist order requiring the defendant to obtain approval for a modification of the general permit and to develop a management plan for the long-term operation and maintenance of sediment and erosion control measures installed as a result of the initial cease and desist order. Finally, the department of environmental protection issued a notice of violation to the plaintiff, in which it claimed that, if the plaintiff owned the property on which the defendant had begun development work, the plaintiff may be in violation of the law and subject to its ongoing enforcement action. Even before receiving the notice of violation from the department of environmental protection, the plaintiff had initiated the present action, seeking a temporary injunction against the defendant to prevent it from exercising any special declarant rights in Cantonbury Heights. After receiving the notice of violation, the plaintiff amended its complaint to include a count sounding in indemnity for any costs incurred by the plaintiff as a result of the violations alleged by the department of environmental protection.

In ruling on the plaintiff's motion for a temporary injunction, the trial court concluded that there existed an insufficient likelihood of the plaintiff prevailing on the merits of the case to grant the motion. In reaching its conclusion, the trial court focused on article VIII of the declaration, which sets forth the development rights and other special declarant rights along with the limitations on those rights. Specifically, the trial court determined that "the primary issue [was] whether the special declarant rights, which include development rights ... [had] expired pursuant to § 8.9 of the declaration ...." Section 8.9 of article VIII of the declaration provides: "Unless sooner terminated by a recorded instrument executed by the Declarant, any Special Declarant Right may be exercised by the Declarant so long as the Declarant is obligated under any warranty or obligation, owns any units or any Security Interest on any Units, or for 21 years after recording the Declaration, whichever is sooner. Earlier termination of certain rights may occur by statute. Additional limitations occur in Article XVIII." Because the parties had agreed that the defendant was not obligated under any warranties, and did not own any units or any security interest therein, the issue before the trial court was whether the defendant remained obligated under any other obligation contemplated by the declaration. The trial court concluded that the defendant, as the successor to the special declarant rights, continued to be bound by the obligations imposed by the act, including the obligations to pay taxes and all expenses, such as maintenance and insurance expenses, on those portions of the common elements for which development rights had been reserved. Furthermore, the trial court concluded that the defendant remained liable for its torts in connection with the common interest property that it had the responsibility to maintain. Thus, because the trial court concluded that these obligations satisfied the requirement in § 8.9 of the declaration that the declarant be "obligated under any ... obligation," it concluded that the plaintiff could not prevail on the merits. The trial court also found that the defendant had corrected the environmental violations and brought the project into compliance with the orders of the Canton inland wetlands and watercourses agency and the department of environmental protection.

The plaintiff subsequently filed a motion for reargument, claiming that the trial court had ignored unambiguous language in § 8.9 of article VIII of the declaration, and that it had failed to address the implication of § 18.5 of article XVIII of the declaration, which requires the consent of 51 percent of the eligible mortgagees of units at Cantonbury Heights for declarant rights to be exercised beyond seven years after the declaration was recorded. In response, the trial court held a hearing on the plaintiff's motion where it suggested that the issue of eligible mortgagee consent could be avoided if the defendant obtained the consents, which the defendant agreed to attempt to do. The parties also stipulated that the plaintiff's motion for a temporary injunction should be considered as a claim for a permanent injunction. The defendant eventually offered the consents of all three eligible mortgagees at a separate hearing. The consents were in the mode of a form prepared by the defendant's attorney for each mortgagee and signed by an agent of that mortgagee purporting to give the necessary consent. The plaintiff objected to admission of the consent forms as hearsay. The trial court concluded that the forms were admissible as...