Town of Rocky Hill v. Securecare Realty, LLC

• Decision Date: 06 January 2015
• Docket Number: No. 19275.,19275.
• Citation: 105 A.3d 857,315 Conn. 265
• Court: Connecticut Supreme Court
• Parties: TOWN OF ROCKY HILL v. SECURECARE REALTY, LLC, et al.

315 Conn. 265

105 A.3d 857

TOWN OF ROCKY HILL

v.SECURECARE REALTY, LLC, et al.

No. 19275.

Supreme Court of Connecticut.

Argued Sept. 23, 2014.

Decided Jan. 6, 2015.

Proloy K. Das, with whom, were Morris R. Borea, and, on the brief, Thomas A. Plotkin, Hartford, for the appellant (plaintiff).

Jonathan M. Starble, for the appellees (defendants).

Ross H. Garber and Michael A. King, Hartford, filed a brief for the Connecticut Conference of Municipalities as amicus curiae.

ROGERS, C.J., and PALMER, EVELEIGH, ESPINOSA, ROBINSON and VERTEFEUILLE, Js.

Opinion

VERTEFEUILLE, J.

This case presents the question of whether a group of private entities, who together have contracted with the state pursuant to General Statutes § 17b–372a¹ to provide nursing home services to state prisoners and others in state custody, comprise an “arm of the state” that may assert the defense of sovereign immunity in an action brought against them by a municipality claiming noncompliance with its zoning regulations. The plaintiff, the town of Rocky Hill, appeals from the trial court's dismissal of an action for declaratory and injunctive relief that the plaintiff had brought against the defendants, SecureCare Realty, LLC (SecureCare), the owner of the real property at issue, and iCare Management, LLC (iCare), a management and consulting firm overseeing the development of a § 17b–372a nursing home on that property. A third entity, SecureCare Options, LLC (Options), was formed by iCare to lease the property from SecureCare and to operate the nursing home, but is not a party to this action. The plaintiff claims that the trial court improperly dismissed the action against the defendants because, contrary to the conclusions of the trial court, (1) they are not an “arm of the state,” entitled to sovereign immunity, pursuant to the test articulated by this court in Gordon v. H.N.S. Management Co., 272 Conn. 81, 98–100, 861 A.2d 1160 (2004), and (2) the legislature, by its enactment of § 17b–372a, did not intend to preempt the application of local zoning laws to the owners and operators of private nursing home properties with which the state contracts under the authority of that provision. We agree with both of these claims and, accordingly, reverse the judgment of the trial court.²

The operative complaint, dated January 23, 2013, contains the following allegations, which the defendants did not dispute. SecureCare is a private company that owns property in the town of Rocky Hill, on which a nursing home facility previously had been operated.

The property is located in a district that is zoned for residential use. SecureCare has neither sought nor received from the plaintiff any special use permits in connection with its use of the property.³

iCare is a private management and consulting company that, at the time the action was commenced, was negotiating with the state to reopen the nursing home facility on the property and to place at that facility individuals who were in state custody. In connection with this plan, iCare formed SecureCare for purposes of owning the property.

The project contemplated by the defendants and the state was authorized by No. 11–44, § 117, of the 2011 Public Acts, codified at § 17b–372a, which permits certain state officials to “establish or contract for the establishment of” nursing home facilities for state prisoners and individuals receiving services from the Department of Mental Health and Addiction Services (department). See footnote 1 of this opinion. According to the complaint, “[t]he rationale behind [this] legislation is to place prisoners who would otherwise be incarcerated in state correctional facilities in private facilities so that their health care costs would be covered by the federal Medicaid program.”⁴ The complaint alleged further that the legislature did not intend for such facilities to be located in residential areas, and that the state, when requesting proposals, had indicated that property on which a § 17b–372a facility would be located must already be properly zoned for that use.

According to the complaint, the state recently had announced plans for a “§ 17b–372a [f]acility to be owned and operated by a private contractor and located at the [p]roperty [owned by SecureCare].” The plaintiff sought declaratory and injunctive relief, namely, a determination that the defendants were prohibited from opening or operating the proposed facility on the property because such use would be noncompliant with town zoning regulations and did not constitute a prior nonconforming use, and no special permit had been sought or issued.⁵

The defendants responded to the plaintiff's complaint by filing a motion to dismiss. Therein, they claimed that the action was barred by sovereign immunity and, therefore, should be dismissed for lack of subject matter jurisdiction. According to the defendants, they were an “arm of the state” pursuant to the test articulated by this court in Gordon v. H.N.S. Management Co.,

supra, 272 Conn. at 98–100, 861 A.2d 1160, and, therefore, immune from suit. The defendants filed a number of affidavits and exhibits in support of their motion to dismiss, including: the department's February 6, 2012 request for proposals concerning the nursing home project and iCare's March 30, 2012 response thereto; a June 11, 2012 letter from the department awarding iCare the opportunity to enter contract negotiations; the affidavit of Chris S. Wright, who is president of iCare, SecureCare and Options; Wright's September 6, 2012 letter to a department official discussing iCare's progress and requesting certain contractual assurances before iCare would move forward with the project; an October 5, 2012 letter agreement subsequently executed by iCare and the department; a January 30, 2013 start-up contract between Options and the department; a series of correspondence between Jonathan Starble, the defendants' counsel, and Kim Ricci, the plaintiff's zoning enforcement officer; and a document, captioned “Frequently Asked Questions,” that was released by the department on December 11, 2012, to provide information to the public about the nursing home project. The plaintiff filed an objection to the motion to dismiss along with several exhibits and affidavits, including the affidavit of Ricci and a transcript from the department's March 5, 2012 bidders' conference for the nursing home project.

The department's February 6, 2012 request for proposals described the general parameters for the proposed nursing home project and invited qualified bidders to apply. It indicated that existing nursing home facilities were preferred, and that “[t]he proposed building must be properly zoned” to accommodate the identified clientele. Regarding proposed sites for the facility, bidders were directed to identify and describe the features of specific locations, and to include “proof of compliance with zoning....” Consistent with the request for proposals, the bidders' conference transcript reflects that, at that conference, a representative of the Department of Correction informed prospective bidders that the state was looking for a facility that already was properly zoned for the nursing home project. The request for proposals also required bidders to provide detailed evidence of their financial strength and stability, including an explanation of how they would fund the project, and to include proof of any liability insurance they presently held.

In its response to the request for proposals, iCare stated, in regard to location, that it was “considering the purchase of a presently vacant and appropriately zoned” nursing home facility. It indicated further that it would form a new entity to manage the proposed facility, if it were awarded the contract, and that the new entity would provide “a substantial real estate tax base for the local municipality” in which the facility was located.⁶ iCare also represented that it currently managed nine other nursing home facilities in Connecticut, all of which had been purchased from state receivership.⁷

In his September 6, 2012 letter to the department, following the department's offer to iCare to enter contract negotiations, Wright informed the department that iCare was pursuing the purchase of the existing facility in the town of Rocky Hill for the project. He stated that iCare had engaged legal counsel “to investigate relevant zoning issues” with the plaintiff, and that counsel “believe[d] that a nursing home could be reopened at this site without any public zoning hearing or significant permitting process.”⁸

In his affidavit, Wright attested, in relevant part, to the following: On October 5, 2012, the department and iCare had entered a letter agreement regarding development of the nursing home project. SecureCare was created on October 31, 2012, for the sole purpose of owning the nursing home property, and had purchased it in November, 2012, for $1.9 million plus $119,000 in associated costs. Additionally, Options was created on the same day as SecureCare, for the sole purpose of operating, as a tenant, that nursing home property. On January 30, 2013, the department and Options had entered a start-up contract. Finally, the department and Options were in the process of finalizing an “[o]perations [c]ontract.”

The October 5, 2012 letter agreement was signed by Wright, as president of iCare, and a representative of the department. Generally, it provided that the state would reimburse iCare “or its affiliates” for up to $500,000 of their “start-up costs such as hiring of personnel, capital improvements, and licensure expenses,” upon the purchase of a nursing home facility but prior to licensure of that facility. Additionally, the letter agreement provided that, in the event the facility never received licensure or admitted clients, or subsequently was closed due to state action, the state would reimburse iCare up to $500,000 in the first year, and an unspecified “diminishing amount” in the second year, “for...