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City of Bridgeport v. Grace Building, LLC

Court of Appeals of Connecticut

April 24, 2018

CITY OF BRIDGEPORT
v.
GRACE BUILDING, LLC

          Argued January 16, 2018

         Procedural History

         Summary process action, brought to the Superior Court in the judicial district of Fairfield, Housing Session, where the defendant was defaulted for failure to appear; thereafter, the court, Rodriguez, J., rendered judgment of possession for the plaintiff, from which the defendant appealed to this court; subsequently, the court, Rodriguez, J., denied the defendant's motion to open the judgment, and the defendant filed an amended appeal with this court; thereafter, the court, Rodriguez, J., issued an articulation of its decision. Reversed; further proceedings.

          Gary A. Mastronardi, for the appellant (defendant).

          Russell D. Liskov, associate city attorney, for the appellee (plaintiff).

          Sheldon, Elgo and Eveleigh, Js.

          OPINION

          ELGO, J.

         The defendant, Grace Building, LLC, [1]appeals from the judgment of the trial court denying its motion to open the default judgment rendered in favor of the plaintiff, the city of Bridgeport. On appeal, the defendant claims that the court abused its discretion in so doing. We agree and, accordingly, reverse the judgment of the trial court.

         The plaintiff commenced this summary process action against the defendant on October 22, 2014. In its complaint, the plaintiff alleged that the parties entered into an oral lease agreement in February, 2011, regarding real property located at 560 North Washington Avenue in Bridgeport (property) owned by the plaintiff. The plaintiff alleged that the agreement was for the term of one year and obligated the defendant to pay it ‘‘$70, 000 in a lump sum and $20, 000 in a lump sum in August, 2012.'' The complaint further alleged that the defendant had failed to make those payments in accordance with the oral agreement. On November 6, 2014, the defendant filed an answer, in which it denied the substance of the plaintiff's allegations. More specifically, the defendant alleged that the parties had entered into a written lease agreement on August 18, 2010, for a term of ninety-eight years. The defendant further claimed that the payment schedule alleged in the plaintiff's complaint ‘‘does not conform to the terms of the written lease agreement.'' The defendant also raised three special defenses, all of which pertained to remediation of the property.[2] On November 20, 2014, the defendant filed an amended answer and special defenses, wherein it pleaded, in addition to the aforementioned allegations, that ‘‘[d]eductions in rent have not been credited contrary to prior agreement'' of the parties.

         On January 5, 2015, the defendant filed a motion to transfer the matter from the Housing Session to the regular docket of the Superior Court pursuant to Practice Book § 24-21, asserting that ‘‘good defenses exist in this matter, '' including estoppel, unconscion ability, and breach of the covenant of good faith and fair dealing. That motion further stated that the defendant ‘‘wishes to utilize the discovery process. The defendant wishes to be able to exercise [its] right to a trial by jury. And the defendant wishes to preserve [its] right to the appellate process, all of which may be had by the granting of this motion.''

         While the motion to transfer was pending, the court scheduled a trial for February 13, 2015. On January 29, 2015, the defendant filed a motion for a continuance with the consent of the plaintiff due to ongoing discussions between the parties about a possible resolution to the dispute. That motion was granted, and a new trial date was set for March 13, 2015. On February 11, 2015, the defendant filed a second motion for a continuance with the consent of the plaintiff because the parties were ‘‘negotiating a settlement.'' That motion was granted, and a new trial date was set for March 27, 2015. On March 10, 2015, the defendant filed a third motion for a continuance with the consent of the plaintiff because the parties were ‘‘discussing resolution'' of their dispute. That motion was granted, and a new trial date was set for May 1, 2015.

         On April 30, 2015, the plaintiff filed an objection to the defendant's motion to transfer. In its objection, the plaintiff argued that transfer was unnecessary because ‘‘the Housing Session is a full service branch of the Superior Court and is completely and fully equipped and competent to handle such a matter.''

         The court held a hearing on the defendant's motion to transfer on May1, 2015. At that hearing, the defendant argued that this case involved a lengthy ‘‘lease option agreement [whose] purpose . . . was to . . . allow [the defendant] to purchase the property while not assuming liability for ground contamination to the property . . . .'' The defendant emphasized that ‘‘there are a lot of complicated issues in which [the defendant had] a lot of back and forth with the [plaintiff]. A lot of problems concerning the property in which [the defendant] relied on or understood that certain amounts of [its] investment in the property would be credited toward [its] back rent. [The defendant has] invested in excess of a million dollars into the property. . . . [G]iven the issues involved here, we feel this would be more properly transferred to the regular civil docket.'' In response, the plaintiff again argued that ‘‘this Housing Session is capable of resolving all issues that we have . . . .'' Significantly, the plaintiff at that time stated that ‘‘if [the defendant] wants depositions, notice them, we'll be there. If [the defendant] wants discovery, file them, we'll answer the questions. . . . If [the defendant] needs time to do certain things, I'll give [it] the time [it] needs. . . . If [it] wants to do depositions, I'll give [it] whatever time [it] needs. If [it] wants to file interrogatories . . . file them. We'll answer them. Not a problem.'' The court then denied the defendant's motion to transfer and the proceeding adjourned.

         That afternoon, the plaintiff filed an amended complaint in which it acknowledged the existence of a written agreement, as first alleged by the defendant in its original answer filed almost six months earlier. That amended complaint alleged that the defendant, on August 18, 2010, entered into a written lease agreement (agreement) regarding the property. Appended to that pleading was a copy of the agreement signed by both parties. Pursuant thereto, the defendant agreed to pay the sum of $300, 000 in four installments in exchange for a lease of ninety-eight years, as well as an option to purchase. An initial payment of $20, 000 was due ‘‘[a]t the [c]losing''; a second payment of $10, 000 was due two months after the date of the closing; $70, 000 was due six months after the date of closing; and $200, 000 was due twelve months after the date of closing.[3] The complaint further alleged that although the defendant ‘‘uses and occupies the [property] as agreed in the [agreement], '' it had failed to make the payments specified therein.

         On May 4, 2015, the defendant filed an answer to the plaintiff's amended complaint, in which it denied that it had failed to make the required payments. Rather, the defendant alleged that ‘‘[r]ent was paid in the form of agreed upon repairs, cleanup, and/or improvements to the property.'' (Emphasis added.) The defendant at that time also raised eight special defenses that primarily concerned the defendant's allegations of ‘‘ground contamination'' on the property that necessitated remediation.[4]

         The court thereafter scheduled a trial for May 15, 2015. On May 11, 2015, the defendant filed a motion for a continuance with the consent of the plaintiff because ‘‘the parties have agreed to a sixty day continuance for completion of discovery.'' That motion was granted, and a new trial date was set for June 19, 2015.

         On June 15, 2015, the defendant filed a motion for a continuance with the consent of the plaintiff. In that motion, the defendant's counsel, Attorney Robin H. Lasky, indicated that the reason for the request was that discovery was not complete. As Lasky stated: ‘‘My client has been unavailable traveling out of state for the last two weeks. I have not yet received a response to my request for production which the [plaintiff's] attorney has asked me to anticipate receiving this week. The plaintiff has agreed to a continuance until July 17, 2015, and I humbly request the court grant this motion so that I may have sufficient time to review requested [materials] and confer further with my client.''[5] The court denied that request on June 15, 2015.

         On June 17, 2015, Lasky filed a motion to withdraw his appearance due to ‘‘a breakdown in communication'' with his client and an ‘‘[i]rreconcilable disagreement as to the best legal strategy . . . .'' The court held a hearing on June 19, 2015, at which it heard from Lasky and Femi Olowosoyo, the owner and principal of the defendant. At that time, Olowosoyo communicated his displeasure with Lasky and requested a continuance of eight weeks to enable him to secure new counsel. In response, the plaintiff's attorney stated that he ‘‘would like the case to be set down for July 17. I think that's more than enough time for this gentleman to get a lawyer. You can go out the door and knock a tree and knock six lawyers out of the tree with a stick for a case.'' When the plaintiff's counsel then remarked that ‘‘the case has been pending since October of 2014, '' Olowosoyo stated: ‘‘I've never asked for any time to find an attorney, Your Honor. This is the first time I'm asking, and I'm hoping that the court will find it reasonable enough to grant [the request] . . . .''

         The court granted a continuance, albeit one four weeks less than Olowosoyo had requested. As it stated: ‘‘I'm going to grant the continuance request. I'm going to grant the motion of [Lasky] to withdraw and give you the opportunity to hire a new lawyer. But let me be very clear about this . . . you need to have an attorney because you can't represent your [limited liability company]. On July 17, [2015], which is . . . when this case is scheduled next, if you're not here with an attorney, then a default can enter against you, and [y]our company will lose the case because you cannot represent [the defendant] . . . .'' Olowosoyo confirmed that he understood the court's directive.

         The court then scheduled the case for trial on July 17, 2015. On that date, Olowosoyo appeared before the court without counsel. The plaintiff's attorney at that time informed the court that Olowosoyo ‘‘did have a lawyer here today but he would not enter an appearance on [the defendant's] behalf.'' Accordingly, the plaintiff asked the court to render a default judgment. The court then addressed Olowosoyo, stating: ‘‘Sir, I've had a conversation with you in the past. I'm really not even permitted to allow you to address the court because you're not an attorney and you're not a defendant or a litigant in this case. And today's date was a final date, so a default will enter with regard to the [defendant].'' With that, the proceeding adjourned. Later that day, the court issued a notice that the defendant had been defaulted for failure to appear.

         Six days later, Attorney David E. Dobin of the law firm of Cohen and Wolf, P.C., filed an appearance on behalf of the defendant. At that time, the defendant commenced an appeal from the default judgment with this court.

         On August 7, 2015, the defendant filed with the trial court a motion to open the default judgment, [6] which alleged that reasonable cause and good defenses to the plaintiff's action existed, as specified in the defendant's May 4, 2015 answer and special defenses. The defendant further alleged that ‘‘between June 19, 2015, the date [Lasky] withdrew his appearance, and July 17, 2015, the date of [the default judgment], defendant was diligent in searching for replacement counsel. Indeed, by June 22, 2015, defendant had dropped off the file related to this case with Attorney Brendan O'Rourke, who held onto the file for several weeks before telling defendant, for the first time, on July 16, 2015-one day before the scheduled trial date-that he would attend court with defendant but not file an appearance, severely prejudicing the defendant.'' (Emphasis in original.)

         A sworn affidavit from Olowosoyo accompanied the defendant's motion to open the default judgment, in which Olowosoyo affirmed that he was the owner and president of the defendant. Olowosoyo stated in relevant part that the property ‘‘was in a dilapidated condition and the [p]laintiff was interested in the [d]efendant's rehabilitation of the [property]. . . . [B]oth before and after the execution of the [agreement], representatives of the [p]laintiff, including Bill Finch, Bill Coleman, and Max Perez represented to me that expenditures made to improve the [property] including cleaning up the [property] prior to execution of the [agreement] and fixing damage to the [property] caused by a tornado, would be credited towards the rent due under the [agreement], that real property taxes would be abated for [eight] years and that additional amounts spent by [d]efendant to repair the tornado damage would be credited towards future transactions between [the parties]. In reliance on those representations, [d]efendant did not pay the rent that that [agreement] states was due . . . . In further reliance on the [p]laintiff's representations, since 2010, [d]efendant has incurred approximately $2 million in expenses in improving the [property].''

         With respect to his efforts to secure legal counsel, Olowosoyo stated in the affidavit that he first spoke with O'Rourke on June 19, 2015, and ‘‘dropped off the file at [his] office'' on June 22, 2015. The affidavit states that Olowosoyo thereafter spoke with O'Rourke on several occasions about the case, and that O'Rourke informed him that O'Rourke had ‘‘reached out'' to the plaintiff's counsel on the defendant's behalf and ‘‘was waiting to hear back.'' Olowosoyo then stated that ‘‘[o]n July 16, I spoke with [O'Rourke]. The [p]laintiff's counsel called him while he was on the phone with me to discuss the case. [O'Rourke] called me back to let me know that the case was going to go forward the next day and for the first time, told me that he would only be able to go with me to court as an advisor, that he wouldn't be able to enter an appearance because that would hurt my case as he was not ...


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