Town of Canton v. Cadle Props. of Conn., Inc.

• Decision Date: 26 February 2019
• Docket Number: AC 40484
• Citation: 188 Conn.App. 36,204 A.3d 62
• Parties: TOWN OF CANTON v. CADLE PROPERTIES OF CONNECTICUT, INC.
• Court: Connecticut Court of Appeals

188 Conn.App. 36

204 A.3d 62

TOWN OF CANTON

v.CADLE PROPERTIES OF CONNECTICUT, INC.

AC 40484

Appellate Court of Connecticut.

Argued November 13, 2018

Officially released February 26, 2019

Eric H. Rothauser, West Hartford, for the appellant (intervening defendant).

Logan A. Carducci, with whom were Daniel J. Krisch and, on the brief, Kenneth R. Slater, Jr., Hartford, for the appellee (plaintiff).

Keller, Prescott and Pellegrino, Js.

KELLER, J.

On April 26, 2011, the plaintiff, the town of Canton (town), filed a petition for an appointment of a receiver of rents after the named defendant, Cadle Properties of Connecticut, Inc. (Cadle), failed to pay property taxes on real property it owns at 51 Albany Turnpike in Canton. The court granted the petition on June 20, 2011. In this appeal, the intervening defendant, M & S Associates, LLC, which currently occupies the subject property, appeals from the trial court's post-judgment order approving an interim accounting filed by the receiver of rents, Boardwalk Realty Associates, LLC (receiver).¹ The defendant claims that the trial court erred in granting the receiver's motion for approval of the interim accounting by misconstruing General Statutes § 12-163a² and finding that the receiver is not required to pay, from the date of the receiver's appointment, the defendant's utility costs at the subject property. We disagree.

In a prior appeal, our Supreme Court set forth the following undisputed facts and procedural history, all of which are relevant to the present appeal:³ "[Cadle] ... is the owner of real property in Canton .... After Cadle effectively abandoned the property, which is ... environmentally contaminated⁴ ... the town ... filed a petition 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 $ 884,263.04.⁵ The petition further alleged that, during all relevant periods, the property was occupied by a Volkswagen dealership owned by [the defendant], 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 receiver, and issued orders authorizing the receiver to collect all rents or use and occupancy payments due with respect to the property.

"After the receiver served the [defendant] with a notice to quit possession of the property on the ground of nonpayment of rent, the [defendant] filed a motion to intervene in the town's action against Cadle in order to challenge the receiver's authority to take legal action against it. Shortly thereafter, the receiver filed a motion to modify the receivership order to authorize it to pursue an eviction of the [defendant] 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 the [defendant's] pending motion to intervene, the court granted the receiver's motion to modify without objection.

"Subsequently, the trial court granted the [defendant's] motion to intervene in the action. The [defendant] then filed a motion to remove the receiver, asserting, inter alia, that the receiver 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 ...." (Footnotes added and omitted.)

Canton v. CadleProperties of Connecticut, Inc. , 316 Conn. 851, 854–55, 114 A.3d 1191 (2015). The defendant appealed from the court's denial of its motion for removal. As noted previously, the defendant, in part, prevailed in its appeal because our Supreme Court ruled that the receiver only had authority under the statute "to use legal process to collect past due rent ...." Id., at 862, 114 A.3d 1191. The case was remanded to this court with direction to affirm the trial court's judgment with respect to its conclusion that the receiver has the authority to use legal process to collect past due rent. Id., at 853, 863, 114 A.3d 1191.

On March 3, 2017, the receiver filed an interim accounting, and moved the trial court to approve said accounting and its previous disbursal of funds. In relevant part, the defendant objected on the ground that the accounting submitted indicated that the receiver had failed to comply with the order of priorities for distributions under § 12-163a, in that "[t]here is no indication in the accounting of any payments being applied to utilities supplied after the date of the receiver's appointment."⁶

On April 24 and May 15, 2017, the court held a hearing on both the receiver's motion to approve its interim accounting and the defendant's objection to it. During the April 24, 2017 hearing, the court requested that the receiver file a more detailed accounting of the fees and expenses that it claimed. The receiver complied by filing an updated accounting on May 12, 2017. The defendant argued to the court that § 12-163a (a) requires the receiver to pay the costs for utilities due on and after its appointment, notwithstanding the fact that the expired lease agreement between the defendant and Cadle had provided that the defendant would pay for the cost of its utilities or, in continuing to operate its automobile dealership, the defendant had been paying the utilities supplying service to the dealership after the lease expired. The defendant pointed to the language of § 12-163a, arguing that the statute clearly did not distinguish between the owner's and the tenants' utility obligations. Accordingly, the defendant asserted that it was the obligation of the receiver to reimburse it for approximately $ 25,000 that it had expended for utilities provided to the property since the date of the receiver's appointment.

The receiver responded that the defendant's interpretation of the statute was "tortured," and that it would permit the defendant to "continue to squat on the property and have its utilities reimbursed from a nonexistent rent stream back into its pocket."⁷ The receiver further asserted that the intent of the statute was to pay utility bills owed to the enumerated utilities by the owner/landlord but not those owed by the tenants. It declared that the defendant's interpretation was "absurd" because it would result in unjustly rewarding a non-rent-paying "squatter" that had continued to operate its business on the property and utilized utilities only for its own business functions. The receiver, as of the date of the hearing, was collecting no rental payments and had collected, since 2011, only a small amount of rent, resulting in a little less than $ 50,000 being remitted to the town for its taxes.

In an oral decision, the trial court approved the updated interim accounting and overruled the defendant's objection, concluding that § 12-163a only requires the receiver to pay those utility costs "for the common areas or the areas that are the responsibility of the owner ...." The court concluded there was no authority that required the receiver to reimburse tenants for utility costs that they were already obligated to pay.⁸ This appeal followed.

Whether § 12-163a mandates that a receiver pay utility bills incurred by a tenant or former tenant occupying the property in question is an issue "of statutory construction subject to plenary review and well established principles." Canton v. Cadle Properties of Connecticut, Inc. , supra, 316 Conn. at 856, 114 A.3d 1191. General Statutes § 1-2z instructs that "[t]he meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." See Rainforest Cafe, Inc. v. Dept. of Revenue Services , 293 Conn. 363, 372–81, 977 A.2d 650 (2009) (engaging in statutory analysis pursuant to § 1-2z ).

Section 12-163a (a) mandates that a receiver of rents is to distribute funds collected from rental or use and occupancy payments in the following order of priority: (1) payment for taxes due on and after the date of its appointment; (2) payment for electric, gas, telephone, water or heating oil supplied on and after such date; (3) reasonable fees and costs determined by the court to be due the receiver; (4) reasonable attorney's fees and costs incurred by the petitioner; (5) delinquent taxes; and (6) amounts to such interested parties as the court may direct. See General Statutes § 12-163a (a).

The defendant claims that the court should not have approved the interim accounting because the receiver did not reimburse the defendant for its utility expenditures on behalf of its automobile dealership, which continues to operate on the property. It argues that a plain reading of the statute does not limit the required, enumerated utility payments to those obligated to be paid by the owner of the property, and that courts cannot add to and modify statutory language because they believe the legislature made drafting errors. The defendant notes that receivership statutes like § 12-163a, which are sui generis, are to be strictly construed, as they are in derogation of the common law. See Connecticut Light & Power Co. v. DaSilva , 231 Conn. 441, 446, 650 A.2d 551 (1994) (in light of language, purpose and sui generis nature of General Statutes § 16-262f, trial court mistaken in assumption that appointment of rent receiver for protection of utility governed by wide-ranging equitable and discretionary principles of ordinary mortgage foreclosure proceedings); Southern Connecticut Gas Co. v. Housing Authority , 191 Conn. 514, 518–20, 468 A.2d 574 (1983) (utility rent receivership under § 16-262f is special statutory proceeding, not civil action, and...