Opinion
No. CV 02 0188888
September 2, 2004
MEMORANDUM OF DECISION
FACTS
The plaintiff, Jerome Rapoport, owns a home within the limits of Southfield Point, in Stamford. Southfield Point is a residential subdivision that is adjacent to Stamford Harbor and the Long Island Sound. The development of Southfield Point dates back to 1914 when the Southfield Point Company platted a map of the area, which was recorded in the Office of the Stamford Town Clerk in the same year.
The defendant, Southfield Point Association (Association), is a Connecticut non-stock corporation incorporated on April 9, 1928. On April 20, 1928, at its first meeting, the Association unanimously adopted bylaws which, among other things, provided for annual dues and assessments. Article II, § 1 provided that, "[m]embers shall pay . . . in each year, a sum not exceeding twenty-five cents for each front foot of property owned at Southfield Point, for the purpose of keeping the streets and street crossings swept in a cleanly manner, the public shrubbery and lawns properly mowed, trimmed and renewed . . ." Article II, § 2 provided that, "[i]n addition to the dues enumerated in Section 1 . . ., each member shall pay . . . an assessment equal to ten mills for each dollar of the assessed valuation of his of her real property . . ."
In 1932, various common areas, including the roads internal to the subdivision, a small parcel of property known as the Plaza, a private beach and a ten-foot right of way leading to the beach were conveyed to the Association. The current membership of the Association includes all forty-one owners of real property that front on, and have principal access over, roads that are maintained by the Association. The deeds of almost all of the Southfield Point properties contain an easement granting the owner the right to use the Association's common areas. That easement reads: "Together with a right of way as appurtenant to said premises, in common with others, over all streets, roads and ways as laid out on the above mentioned map, and to the waters of Stamford Harbor, over Birch Road as shown on said map, now known as Cook Road, and an extension thereof Sixty (60) feet in width Easterly to the waters of Stamford Harbor; together also with a right of way appurtenant to said premises over Davenport Drive and over a passway ten (10) feet in width running Easterly from the southerly terminus of said Davenport Drive to a bathing beach designated as "Beach" on the above mentioned map, together with the right to use the beach in common with others." (Emphasis added.)
The Association incurs the responsibility and costs of repairing and maintaining the common areas, and collects those costs from Association members through the annual dues and assessments described in Article II of the Association's bylaws. In 1980, the Association amended Article II, § 2 of the bylaws to substitute a fixed percentage formula for the previous mill rate formula, so that each member would be responsible for paying a fixed percentage of the Association's approved annual budget after subtracting the amount raised through the frontage assessment.
Rapoport purchased his home on November 18, 1992, after having visited Southfield Point several times to view the property. He was aware of the existence of the Southfield Point Association. In addition to the shared easement, Rapoport's deed contains a condition that, "[s]aid premises are conveyed subject to the following: . . . (5) Dues and assessments, if any, of the Southfield Point Association." Upon moving to Southfield Point, Rapoport became active in the Association. He has served as a member of the Association's Board of Directors and served one term as the Association's vice president. From the time he moved to Southfield Point until the 1998-99 fiscal year, Rapoport paid the Association's annual assessments without objection.
In response to all assessments after 1999, Rapoport has claimed that he is not obligated to pay the Article II, § 2 general assessment, and is only obligated to pay the Article II, § 1 frontage assessment. On October 18, 1999, the Association's Board of Directors adopted a motion, copies of which were sent to all members, stating that, "a resident in arrears of his or her dues for a period of two (2) or more years, shall have a lien imposed on his or her property for all amounts due, plus interest." On November 21, 2001, the Association rejected Rapoport's payments of $80 for the 1998-2001 frontage assessment and notified Rapoport that he owed $4,725.34 in overdue assessments and that the Association was prepared to pursue all legal remedies to collect the amounts due.
Rapoport initiated the present action seeking a declaratory judgment that the Association may not impose the general assessment on him and may not file a lien against his property for his refusal to pay the assessment. Rapoport also seeks to enjoin the Association from invoicing him for the general assessment and from threatening legal action for his refusal to pay the assessment. The Association filed a counterclaim seeking a judgment for $6,694.32 in overdue assessments. The case was tried, and the parties submitted post-trial memoranda summarizing their arguments.
ISSUES
The first issue is whether the plaintiff has an obligation to pay the general assessments levied by the homeowner's association of which he is a member. The second issue is whether the defendant is entitled to an equitable lien against the plaintiff's property for his refusal to pay the Association's assessment. This court holds that the plaintiff is liable for the general assessments and that the defendant should be awarded monetary damages for the unpaid assessments, but that the defendant is not entitled to impose a lien on the plaintiff's property.
ARGUMENTS
Rapoport argues that: (1) the covenant in his deed to pay the dues and assessments of the Association is rendered null and void by operation of Connecticut's Marketable Record Title Act (MRTA), General Statutes §§ 47-33b through 47-331, because it is not specifically identified within a title transaction recorded subsequent to his root of title; (2) his common-law obligation is limited to a proportional share of the costs of repairs and maintenance necessary to prevent injury, and that the assessment, which is based on the value of his home, is not proportional to his usage of the common property; (3) the general assessment, because it is based on the assessed value of his property, amounts to a tax and that the Association may not impose taxes; and (4) the Association's remedy for nonpayment of the general assessment is limited to expelling him from membership in the Association, and does not include imposing a lien on his property.
The Association argues in response that: (1) it is authorized by Connecticut's Non-Stock Corporation Act, General Statutes §§ 33-1000 through 33-1290 to levy dues and assessments against its members for which Rapoport is personally liable; (2) the Association has an independent right to collect the dues and assessments pursuant to Rapoport's common-law obligation to contribute to the costs reasonably incurred for the repair and maintenance of his jointly held easement; (3) Rapoport's promise to pay the dues and assessments is not affected by the MRTA because the Act only applies to interests, such as easements, that affect the use of land; and (4) the Association is entitled to a lien on Rapoport's property because he has been unjustly enriched and because the promise in his deed to pay the dues and assessments demonstrates his intention that his property serve as security for the obligation.
FINDINGS Revised Nonstock Corporation Act
The Association claims that it is authorized, under Connecticut's Revised Nonstock Corporation Act, General Statutes §§ 33-1000 through 33-1290, to levy the dues and assessments pursuant to its duly enacted bylaws. General Statutes § 33-1057(b) states, in relevant part, that, "[a] corporation may levy dues or assessments against members if provided in a bylaw provision duly adopted (1) by the affirmative vote of at least two-thirds of the members of each class of members . . . or (2) by the directors if the directors are authorized to do so by a bylaw provision adopted by the affirmative vote of at least two thirds of the members of each class of members . . . to which a levy may apply . . ." Section 33-1057(c) states that "[f]or purposes of this section, the corporation's initial bylaws adopted by (1) the incorporators or (2) the board of directors shall be deemed to have been adopted by all the members entitled to vote thereon, if any."
The initial bylaws of the association were adopted unanimously at the first membership meeting on April 20, 1928. Thus, pursuant to § 33-1057, the initial bylaws were duly adopted. Article II, § 2 of those bylaws provided that "[i]n addition to the dues enumerated in Section 1 . . . each member shall pay . . . an assessment equal to ten mills for each dollar of the assessed valuation of his or her real property . . ." (Emphasis added.) On April 28, 1980, Article II, § 2 was amended to cap the general assessment at eight mills. No change was made to the property value basis of the general assessment.
In 1992, Rapoport purchased his home in Southfield Point. He became actively involved in Association leadership and served as vice president of the Board of Directors. For seven years he paid the general assessment levied by the Association without objection. On April 23, 2001, at the annual meeting of the Association, Article II, § 2 was amended by a unanimous vote of the 23 members present or represented by proxies (out of 41 total). This amendment again retained the property value basis of the assessment and created a "dues percentage" for each member by dividing the year 2000 valuation of the member's home by the total Association value.
Rapoport admits that § 33-1057 allows the Association to charge its members dues and assessments. He complains, however, that the Association failed to comply with its own bylaws when it amended the general assessments. Article VI, § 1 of the Association's bylaws provide, in relevant part, that: "These By-laws may be amended . . . at any regular meeting of the Association . . . by a majority vote of the members of the Association voting in person or by proxy, provided, however, that the proposed amendment . . . shall have been approved by the Board of Directors: and further provided that ten days notice of the proposed amendment . . . shall have been given by mail to each member of the Association."
Rapoport's argument is based on testimony by the Association president, in which he admitted that he was not sure that the required notice had been mailed to the membership ten days prior to the annual meeting. This evidence is inconclusive and, even if the Association had failed to follow its notice procedure, Rapoport would still be liable for the assessment. Section 33-1058(a) states, in relevant part, that: "A member of a corporation shall not be liable to the corporation or its creditors with respect to such membership except for the obligation to pay in full . . . any dues and assessments levied against him to which he has assented, or imposed or levied against him in accordance with the provisions of section 33-1057." (Emphasis added.) Given the fact that the property value basis of the general assessment was in place when Rapoport purchased his home and that he willingly paid those assessments for seven years, he has assented to the property value basis of the general assessment. Also, Rapoport's argument about the infirmity of the 2001 amendment is apparently an afterthought, since he began withholding payment of the general assessment before the amendment was passed.
Marketable Record Title Act
Rapoport also argues that the Association's assessment constitutes a use restriction or other interest in real property that has been extinguished by operation of the Marketable Record Title Act, General Statutes §§ 47-33b through 47-33l because it is not specifically identified within a title transaction recorded subsequent to his root of title. General Statutes § 47-33c states, in relevant part, that: "Any person having the legal capacity to own land in this state, who has an unbroken chain of title to any interest in land for forty years or more, shall be deemed to have a marketable record title to that interest, subject only to the matters stated in section 47-33d."
Section 47-33d states, in relevant part, that: "Such marketable record title is subject to: (1) All interests and defects which are created by or arise out of the muniments of which the chain of record title is formed; provided a general reference in the muniments, or any of them, to easements, use restrictions or other interests created prior to the root of title are not sufficient to preserve them, unless specific identification is made therein of a recorded title transaction which creates the easement, use restriction or other interest; . . . (4) any interest arising out of a title transaction which has been recorded subsequent to the effective date of the root of title from which the unbroken chain of title of record is started . . ."
Rapoport argues that the condition in his deed that, "[s]aid premises are conveyed subject to . . . (5) Dues and assessments, if any, of the Southfield Point Association," is not a specific enough identification of the interest for purposes of § 47-33d (1) because it does not actually specify if there are any assessments, and if so, what they are. Rapoport's unbroken chain of title begins in 1932 with the certificate of foreclosure dated May 19, 1932, recorded on the Stamford Land Records at Book 415, Page 208. Rapoport distinguishes between the validity of the frontage assessment and that of the general assessment, and argues that the former is valid under the MRTA because it is specifically identified in a recorded 1924 mortgage given by the Southfield Point Company to the Stamford Trust Company. If, however, Rapoport is correct that the general assessment is nullified by the MRTA because it is not specifically identified in his deed, then the frontage assessment is also nullified because the 1924 mortgage is outside Rapoport's chain of title and is not specifically identified in the deed.*/*
"[T]he ultimate purpose of all the Marketable Title Acts is to simplify land title transactions through making it possible to determine marketability by limited title searches over some reasonable period of the immediate past and thus avoiding the necessity of examining the record back into distant time for each new transaction." (Internal quotation marks omitted.) Mizla v. Depalo, 183 Conn. 59, 64 n. 9, 438 A.2d 820 (1981). The MRTA is concerned, as are recording acts generally, with protecting purchasers "against the evils of secret grants and liens." 66 Am.Jur.2d, Records and Recording Laws § 40 (2001). "A purchaser has actual notice if he knows facts sufficient to put a reasonable person on inquiry that, if prosecuted with reasonable diligence, would certainly lead to discovery of conflicting claim." (Internal quotation marks omitted.) Clean Corp. v. Foston, 33 Conn.App. 197, 202, 634 A.2d 1200 (1993).
The relationship between notice and the specificity required by the MRTA is illustrated in Gilbert v. Beaver Dam Assoc., Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 00 0169605 (November 26, 2002, Hodgson, J.). In that case, the plaintiff sought a declaratory judgment declaring that the bylaws and regulations of the association of surrounding property owners did not apply to him, and an injunction prohibiting the association from asserting that they do. Among other things, the plaintiff contested the validity of a condition in his deed that read, "said premises shall be subject to such other reasonable restrictions or limitations as the grantor or any such association may impose thereon." Though the plaintiff in Gilbert did not invoke the MRTA, he did claim that the restriction was of no effect because it did not actually set forth the Association's restrictions and limitations, and thus a title searcher would not be able to find them. In rejecting the plaintiff's claim, and upholding the validity of the restrictions, the court discussed the law of servitudes and noted that, "limitations on a grantee's ownership rights . . . must be applied giving effect to [the] intention expressed by the words of the written instrument construed in the light of surrounding circumstances," and that "[e]very part of the language of a deed is to be given effect." Gilbert v. Beaver Dam Association, supra, Superior Court, Docket No. X01 CV00 0169605. The court discussed the applicability of the MRTA, and found that the language in the plaintiff's deed was sufficiently explicit for purposes of § 47-33d(1). Id. The court held that "the plain language of his deed and the covenants referenced therein put the plaintiff on notice that his ownership would be subject to whatever reasonable restrictions or limitations had been imposed or would in [the] future be imposed by a lake association." Id.
In Mannweiler v. LaFlamme, 65 Conn.App. 26, 34, 781 A.2d 497 (2001), the court found that a condition in the defendant's deed that made his title subject to "possible conditions and restrictions . . ." set forth in earlier deeds satisfied § 47-33d(1) because it provided the defendant with actual notice of the covenants and restrictions in the chain of title. Also, in Asjes v. Parish of Christ Church, Superior Court, judicial district of Stamford, Docket No. CV 96 0152470 (September 26, 1997, D'Andrea, J.) ( 20 Conn. L. Rptr. 466), the court found that the MRTA was not intended to "eviscerate the principles, long embedded in the common law, of equitable servitude," and that, irrespective of the MRTA, the plaintiff should have the opportunity to prove "the existence of the elements necessary to invoke the doctrine of equitable servitude."
In the present case, the condition in Rapoport's deed, construed in the light of the shared easement and his membership in the Association, gave him actual notice of his obligation to pay the Association's dues and assessments and demonstrated his intention to do so. The deed is, therefore, sufficiently specific to satisfy § 47-33d(1). It is further submitted that, because the deed was recorded when Rapoport purchased the property on November 11, 1992, the covenant is valid under § 47-33d(4) as an "interest arising out of a title transaction which has been recorded subsequent to the effective date of the root of title." See Mizla v. Depalo, supra, 183 Conn. 59 (holding that a conveyance or other title transaction creating an easement recorded after the root of title is valid pursuant to § 47-33d(4)).
Plaintiff's Common-law Obligation CT Page 13632
The Association argues that, irrespective of the MRTA, Rapoport has a common-law obligation to contribute to the reasonably incurred costs of repairing and maintaining the land shared in common by the members of the Association. Rapoport admits that he has such an obligation, but argues that it is limited to his proportional share of such repairs as are necessary to prevent injury to the property and to allow the Association to have reasonable use of its property. He argues that such necessary costs do not include expenditures for landscaping and directors' and officers' liability insurance and that because the general assessment is based on his property value, it is not proportional to his use of the common property.
"[J]oint use by the servient owner and the servitude beneficiary . . . of the servient estate for the purpose authorized by the easement . . . gives rise to an obligation to contribute jointly to the costs reasonably incurred for repair and maintenance of the portion of the servient estate . . . used in common." (Internal quotation marks omitted.) Beneduci v. Valadares, 73 Conn.App. 795, 808, 812 A.2d 41 (2002). This is consistent with the rule, stated in 1 Restatement (Third), Property, Servitudes § 4.13(4) (2000), that, "[t]he holders of separate easements or profits who use the same improvements or portion of the servient estate in the enjoyment of their servitudes have a duty to each other to contribute to the reasonable costs of repair and maintenance of the improvements or the portion of the servient estate."
The reasonableness of the Association's expenditures and method of computing the general assessment can be judged in light of the intent and purpose of the deed language and the Association's corporate purpose. Gilbert v. Beaver Dam Association, supra, Docket No. X01 CV 00 0169605. As noted earlier, Rapoport's deed, along with the majority of deeds in Southfield Point, conveys an easement over land owned by the Association and contains a promise to pay the dues and assessments of the Association.
The purposes of the Association are described in the Certificate of Incorporation: "To foster, advocate and protect the interests of property owners and residents at Southfield Point so called, in the Town of Stamford, Connecticut; to encourage all propositions that may be deemed helpful to the development of property at said Southfield Point and to discourage and oppose all propositions that may be deemed detrimental to the property owners and residents therein; to acquire by purchase or otherwise and to hold the existing roads and ways laid out within the limits of the section herein above mentioned; to maintain, repair and improve said existing roads and ways; to maintain, operate and repair private utilities or conveniences which may be necessary or requisite for general use and enjoyment of all property owners and residents . . .; to acquire, maintain and operate a bathing beach at said Southfield Point and erect and maintain thereon suitable bathing houses; to erect and maintain docks and wharves for use and enjoyment by the members of this corporation, with such others who may from time to time become associated with them; to maintain and enforce all the restrictions affecting the property at said Southfield Point . . ."
The Association's bylaws provide a means for determining what the Association may spend money on in fulfillment of its purposes. Article IV, § 6 says, "[t]he Board of Directors may authorize the expenditure of money from the Association's treasury as such Board may see fit, and for such purposes as may be determined by proper resolution of said Board."
Accordingly, the Board's decision to spend money for the landscaping of the common areas and the purchase of liability insurance for the Association's directors and officers is consistent with the intent of Rapoport's deed and the purposes of the Association, and thus, are not unreasonable. For the same reasons, the Association's choice of methods for calculating the general assessment is not unreasonable. The assessment formula was adopted by a majority of the Association's members, is applied objectively and reflects a reasonable conclusion by the Association that the value added to each member's property by the Association's expenditures corresponds to the relative value of each property to the overall value of the Association.
General Assessment as an Unauthorized Tax
Rapoport argues that, because the general assessment is based on property values, it constitutes an unauthorized and unenforceable tax. A tax is, "[a] charge by the government on the income of an individual, corporation, or trust, as well as the value of an estate or gift." (Emphasis added.) Black's Law Dictionary (6th Ed. 1990). Since the Association is not a government entity, the association's general assessment is not a tax.
Equitable Estoppel and Laches
The Association argues that Rapoport should be estopped from denying his obligation to pay the Association's assessments after having paid them for seven years because his change of position has prejudiced the rights of the Association. This argument combines one element of equitable estoppel with one element of laches, and fails to state a claim for either.
"There are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other. In the absence of prejudice, estoppel does not exist." (Internal quotation marks omitted.) Lombardo's Ravioli Kitchen, Inc. v. Ryan, 268 Conn. 222, 236, 842 A.2d 1089 (2004). Rapoport's promise to pay the dues and assessments of the Association was intended to, and did in fact, induce the Association to believe that he would contribute to the costs of repair, maintenance, and improvement of the jointly held property. Further, the Association did expend money in reliance on Rapoport's promise, and therefore, his claim for equitable relief is barred by estoppel.
"The defense of laches, if proven, bars a plaintiff from seeking equitable relief in a case in which there has been an inexcusable delay that has prejudiced the defendant." (Internal quotation marks omitted.) John H. Kolb Sons, Inc. v. GL Excavating, Inc., 76 Conn.App. 599, 612-13, 821 A.2d 774, cert. denied, 264 Conn. 919, 828 A.2d 617 (2003). Rapoport's delay in prosecuting this action for an injunction is inexcusable. He willingly paid the assessments for seven years and participated in the leadership and decision making of the Association and, therefore, had every opportunity to seek this injunction much sooner. The Association was not prejudiced by the delay because its ability to defend the action has not been diminished, and that, therefore, Rapoport's claim for equitable relief is not barred by laches.
Defendant's Entitlement to Impose an Equitable Lien on Plaintiff's Property
Rapoport argues that the Association may not impose a lien on his property for his failure to pay the assessments. The Association argues that it is entitled to a lien on Rapoport's property because he has been unjustly enriched and because the promise to pay contained in his deed indicates his intention that the property serve as security for the payment of the assessments.
"The common law equitable lien is a right, not existing at law, to have specific property applied in whole or in part to payment of a particular debt or class of debts. As such, it constitutes a charge or encumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action." (Citation omitted; internal quotation marks omitted.) Columbia Federal Savings Bank v. International Site Consultants, Inc., 40 Conn.App. 64, 68, 669 A.2d 594, cert. denied, 236 Conn. 910, 671 A.2d 824 (1996). "In order to apply the doctrine of equitable liens, it is essential that there be a debt, duty or obligation owing by one person to another, a res to which the obligation attaches, an intent that the property serve as security for the payment of the obligation, and that the defendants from whom relief is sought . . . have title to the property against which the equitable lien is claimed." 53 C.J.S. Liens § 5 (1987). In addition to these elements, "[t]here must be some ground for equitable intervention including the absence of an adequate remedy at law." Ten Hoeve Bros., Inc., v. Hartford, Superior Court, judicial district of Hartford, Docket No. CV 93 0704020 (May 8, 1996, Corradino, J.) ( 17 Conn. L. Rptr. 173, 174).
Several of the elements of an equitable lien are met in this case. As discussed previously, Rapoport is obligated to pay the Association the unpaid dues and assessments, the obligation is a servitude on his property, and he has title in the property. The Association argues that the equitable ground for the lien is the plaintiff's unjust enrichment. The elements of unjust enrichment are, "that (1) the [plaintiff] was benefitted, (2) the [plaintiff] unjustly failed to pay the [defendant] for the benefits, and (3) the failure of payment was to the [defendant's] detriment." Gagne v. Vaccaro, 255 Conn. 390, 409, 766 A.2d 416 (2001). Rapoport has been benefited by the repairs and maintenance of the common areas, that he has unjustly failed to pay his share and that the Association has incurred the costs of the repairs and maintenance without reimbursement.
However, the requirement of intent is not met in this case. While it is true that Rapoport purchased his property subject to the promise to pay, nothing in the language of the deed or the Association's bylaws demonstrates an intent that the promise be enforceable by a lien on the property. "A mere promise to pay a debt or obligation does not create a lien . . ." 53 C.J.S. Liens § 4(c) (1987).
This court holds that the Association does not lack an adequate remedy at law. "The doctrine of 'equitable lien' . . . [comes] under the maxim, equality is equity, and [is] applied only in cases where the law fails to give relief, and justice would suffer without [it]." 53 C.J.S. Liens § 2(b) (1987). "[An unjust enrichment claim] is an action in quasi contract, i.e. an obligation, arising by law, on which the same remedy is given as would be given if the obligation arose out of contract . . . Although the right of recovery is based on equitable principles, it is nevertheless an action at law, the purpose of which is to prevent unjust enrichment . . . The only remedy is in an award of money damages." Gagne v. Vaccaro, 80 Conn.App. 436, 441, 835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846 A.2d 881 (2004). The only remedy for the Association's claim of unjust enrichment, therefore, is an award of money damages.
CONCLUSION
For the foregoing reasons, the Association is entitled to an award of money damages for $6,694.32, but may not impose an equitable lien on Rapoport's property. Rapoport's request to enjoin the Association from invoicing him for the general assessment is denied.
Grogins, J.