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Town of Canton v. Cadle Properties of Connecticut, Inc.

Court of Appeals of Connecticut

February 26, 2019

TOWN OF CANTON
v.
CADLE PROPERTIES OF CONNECTICUT, INC.

          Argued November 13, 2018

         Procedural History

         Petition for the appointment of a receiver of rents, brought to the Superior Court in the judicial district of Hartford and tried to the court, Graham, J.; judgment granting the petition and appointing Boardwalk Realty Associates, LLC, as receiver of rents; thereafter, the court granted the receiver's motion to modify the order of appointment and granted the motion to intervene as a party defendant filed by M & S Associates, LLC; subsequently, the court denied the intervening defendant's motion to remove the receiver, and the intervening defendant appealed to this court, which reversed in part the trial court's judgment and remanded the case with direction to deny the receiver's motion to modify the receivership orders, and the plaintiff, on the granting of certification, appealed to the Supreme Court, which reversed this court's judgment in part and remanded the case to this court with direction to affirm the judgment of the trial court granting the receiver's motion for modification allowing the collection of back rent allegedly due; thereafter, the court, Scholl, J., granted the receiver's motion to approve its interim accounting report and to disburse funds, and the intervening defendant appealed to this court. Affirmed.

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

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

          Keller, Prescott and Pellegrino, Js.

          OPINION

          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 § 12-163a[2] 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 contaminated[4] . . . 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. Cadle Properties 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., 862. 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., 853, 863.

         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, ...


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