City of New Haven v. Bonner

• Decision Date: 18 January 2005
• Docket Number: (SC 17142).
• Citation: 272 Conn. 489,863 A.2d 680
• Court: Connecticut Supreme Court
• Parties: CITY OF NEW HAVEN v. JANICE M. BONNER ET AL.

272 Conn. 489

863 A.2d 680

CITY OF NEW HAVEN v. JANICE M. BONNER ET AL.

(SC 17142).

Supreme Court of Connecticut.

Argued September 20, 2004.

Officially released January 18, 2005.

Sullivan, C. J., and Borden, Katz, Palmer and Vertefeuille, Js.

Amy P. Blume, assistant corporation counsel, for the appellant (plaintiff).

Jennifer M. Ranciato Celentano, for the appellee (named defendant).

Jonathan D. Elliot filed a brief for ACA International, as amicus curiae.

Opinion

BORDEN, J.

The plaintiff, the city of New Haven, appeals¹ from the trial court's judgment of foreclosure by sale of the plaintiff's municipal tax liens against the property of the named defendant, Janice M. Bonner.² The plaintiff claims that the trial court improperly disallowed a collection agency fee as part of the tax debt owed to it by the defendant pursuant to General Statutes § 12-166.³ We agree with the plaintiff and, accordingly, we reverse the judgment of the trial court in part.

The record reveals the following facts and procedural background. For the tax years 1996 through 2002, the defendant failed to pay real estate taxes on property she owned at 124 Crescent Street, New Haven. The plaintiff brought this action seeking to foreclose its tax liens on the defendant's real property for the tax years in question. After the trial court granted the plaintiff's motion for summary judgment as to liability only, the plaintiff filed a motion for strict foreclosure. At the hearing on the motion, the plaintiff presented its affidavit of debt, which included the collection agency fee incurred by the plaintiff in its efforts to collect the taxes owed. According to the affidavit of debt, the defendant's total debt was $35,207.44, including a $2668.29 collection fee, for the tax years 1996 through 2002. After reviewing the affidavit of debt, the court scheduled a special hearing and instructed the plaintiff to present evidence at the hearing in support of its inclusion of the collection agency fee as part of the tax.

At the special hearing, C.J. Cuticello, the plaintiff's tax collector, testified that the plaintiff has a contract with a collection agency, JER Revenue Services, LLC (JER), for the collection of delinquent property taxes. Cuticello testified further that, prior to referring a delinquent tax account to JER for collection, the plaintiff's general practice is to send the taxpayer two delinquency notices followed by two letters. Both letters inform the taxpayer that should he or she fail to resolve the delinquency, the account will be referred to a collection agency and the taxpayer will be obligated to pay an additional fee. Cuticello also testified that, once the account is referred to JER, the plaintiff sends out a revised bill to the taxpayer, adding the collection fee of 9 percent to the total amount owed. Although the taxpayer is billed immediately for the additional 9 percent fee upon referral of the account to JER, the plaintiff is obligated to pay JER only for successfully collected debts. Under the contract between the plaintiff and JER, the plaintiff is required monthly to pay JER 9 percent of the net collections received during that calendar month. Thus, if the taxpayer never pays the debt, JER receives no money from the plaintiff, regardless of any efforts it has made to collect that particular debt.

Sylvan Ross, the vice president of operations at JER, testified at the hearing that the services provided by JER under the contract include preparing and mailing collection letters, making telephone calls, performing skip tracing to locate the taxpayer, working with the plaintiff on collection strategies, and maintaining contact with the taxpayer and the mortgage companies. Further, if JER's collection efforts fail, JER refers the matter to local law firms to initiate foreclosure proceedings and thereafter monitors the foreclosures. Ross further testified that, because the agency handles the accounts in bulk, it does not maintain records of time devoted to individual cases.

At the hearing, the court refused to award the collection agency fee unless the plaintiff demonstrated what specific actions JER had taken to collect the specific debt owed by the defendant, and expressed its intent to award the plaintiff only the precise value of the service received from JER regarding the defendant's individual account. Finding that the plaintiff had not made such a showing, the trial court rendered a judgment of foreclosure by sale,⁴ but did not award JER's fee as part of the debt. This appeal followed.

The plaintiff claims that the trial court improperly failed to award JER's collection fee as part of the defendant's debt. We agree. We conclude that, pursuant to § 12-166, a municipality seeking to collect delinquent taxes is entitled to include as part of those taxes the collection fees of a collection agency, without having to establish the relationship between the amount of that fee and the specific services that the agency performed regarding that particular delinquent taxpayer or those specific delinquent taxes. Put another way, as in the present case, the municipality is entitled to collect from the taxpayer the collection fee charged to it by the agency at the time of the referral of the delinquent account.

The question of whether § 12-166 allows the trial court to award a collection fee for a particular debt owed by a delinquent taxpayer only if it is demonstrated that the fee reflects the value of the services performed by the collection agency in the collection of that particular debt is one of statutory interpretation, over which we have plenary review. Commission on Human Rights & Opportunities v. Board of Education, 270 Conn. 665, 686, 855 A.2d 212 (2004).⁵ "The process of statutory interpretation involves a reasoned search for the intention of the legislature. . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. In seeking to determine that meaning, we look to the words of the statute[s] [themselves], to the legislative history and circumstances surrounding [their] enactment, to the legislative policy [they were] designed to implement, and to [their] relationship to existing legislation and common law principles governing the same general subject matter. . . . State v. Courchesne, 262 Conn. 537, 577, 816 A.2d 562 (2003)." (Internal quotation marks omitted.) Commission on Human Rights & Opportunities v. Board of Education, supra, 686.

We begin our analysis with the language of the statute. Section 12-166 sets forth the powers and duties of municipal tax collectors and defines "`tax'" for purposes of that section as including "each property tax and each installment and part thereof due to a municipality, as such tax may have been increased by interest, penalties, fees and charges, including collection fees of a collection agency and attorneys' fees, provided such attorneys' fees shall be limited to those ordered by the court in any court action or proceeding brought to recover such tax. . . ." (Emphasis added.) The statute is silent as to whether the court has discretion to determine whether the collection fees reflect the value of the services performed on a particular account; it simply provides that such fees are included as part of the tax. By contrast, § 12-166 also includes attorney's fees as part of the tax, but imposes a limitation upon such fees "provided such attorneys' fees shall be limited to those ordered by the court in any court action or proceeding brought to recover such tax." Thus, the inclusion of attorney's fees as a part of the tax is conditioned on whether the court has ordered such fees. No similar limitation is imposed with regard to collection fees of a collection agency. By conditioning the inclusion of attorney's fees as part of the tax on the court's order, and by failing to place any similar condition on the inclusion of collection fees as part of the tax, the language of the statute strongly suggests that the court has no discretion to disallow a collection fee.

The legislative history of No. 93-318, § 2, of the 1993 Public Acts (P.A. 93-318), provides further support for our conclusion that the inclusion of the collection fee in the tax is not subject to the discretion of the court. The primary purpose of § 2 of P.A. 93-318, which added to § 12-166 the language, "including collection fees of a collection agency," was to clarify "the ability of municipalities to use private collection agencies to collect unpaid property taxes." 36 H.R. Proc., Pt. 25, 1993 Sess., p. 9021, remarks of Representative Jefferson B. Davis. Representative Davis further noted that P.A. 93-318, § 2, clarified "that any collection fee charged by [a] properly delegated collection agency can be included in the total tax due." Id. The legislature, thus, simultaneously acknowledged the legitimate role that collection agencies play in the municipal tax collection process and expressed its intent that collection fees charged should "be included in the total tax due." Id. Furthermore, at the time of the amendment, then Representative M. Jodi Rell remarked on the fact that, at that time, many municipalities already were using collection agencies to aid them in collecting delinquent taxes. Id.

Moreover, when P.A. 93-318 was enacted, General Statutes § 36a-805 (a), which lists prohibited practices for consumer collection agencies, already prohibited collection agencies from charging a fee "in excess of fifteen per cent of the amount actually collected on the debt . . . ." General Statutes § 36a-805 (a) (13). We presume that the legislature was aware of existing statutes at the time that it enacted P.A. 93-318. See Wiseman v. Armstrong, 269 Conn. 802, 822, 850 A.2d 114 (2004). Thus, it is reasonable to infer, based on the legislative history of P.A. 93-318 and based...