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McCreary v. One Strawberry Hill Ass'n, Inc.

Superior Court of Connecticut
Dec 11, 2012
No. FSTCV106006749 (Conn. Super. Ct. Dec. 11, 2012)

Opinion

FSTCV106006749.

12-11-2012

Jamie McCREARY, et al. v. ONE STRAWBERRY HILL ASSOCIATION, INC., et al.


UNPUBLISHED OPINION

GENUARIO, J.

The issue presented is whether the court should grant the defendants' motion for summary judgment on the ground that there is no genuine issue of material fact as to any of the plaintiffs' claims.

On May 12, 2011, the plaintiffs, Jamie and Melinda McCreary, filed a five-count, second amended complaint after the court granted the defendants' motion to strike as to four counts of the plaintiff's first amended complaint on April 29, 2011. The plaintiffs allege the following facts. The plaintiffs are owners of a unit in One Strawberry Hill, a condominium building located in Stamford. The condominium is operated by the defendant, One Strawberry Hill Association, Inc., acting through its board of directors, of which the defendant, Larwrence Davidoff, is the president. Article 23 of the declaration and bylaws of the defendant Association state that the Association shall maintain, repair and replace all of the common elements, including the limited common areas. Section (h) of Article 23 provides that the Association shall obtain reliable and detailed estimates of the cost necessary to place the damaged property in as good a condition as it existed before the casualty. On or about April 23, 2010, the Stamford Health Department cited the defendant Association for severe water damage and the presence of mold and mildew in Unit 5H. On May 14, 2010, the AWA Design Group, P.C. (AWA) provided the defendants with the results of an investigation of unit 5H. It was discovered that the water infiltrated the unit through the balcony spandrel and building facade. AWA further provided a proposal for remedial work for Unit 5H. As of the date that the complaint was filed, the defendants have not taken any action to remediate the mold in Unit 5H. After the defendant Association requested Hoffmann Architects, Inc. to provide proposals for architectural and engineering services in 2007 and 2009, defendant Davidoff stated at a meeting of the board of directors on September 3, 2009 that the reports from Hoffmann Architects did not meet the requests of the defendant Association. That same month, the defendant Association, through its agent, Plaza Realty & Management Corporation, requested a proposal from AWA for proposed various repair and replacement work on the building. On January 22, 2010, AWA issued a preliminary study and report for repair and replacement work and estimated the total cost to be $2.65 million. AWA also provided a $4.84 million option that would include architectural and aesthetic improvements to the building. On March 12, 2010, the board of directors issued a memorandum to all unit owners denouncing the $4.84 million option, stating that it was not viable. In the August 2010 Strawberry Hill Newsletter, the board of directors stated its support for the $2.65 million repair project.

The plaintiffs further allege that on August 30, 2010, the board of directors adopted the assessment of $4.5 million in repairs and aesthetic improvements, and it informed the unit owners of their approval of the assessment on or about September 3, 2010. The defendants have secured financing for the $4.5 million project. On or about September 11, 2010, the board of directors informed the unit owners that if they rejected the proposed $4.5 assessment, the defendant Association would face criminal sanctions. The board of directors and defendant Davidoff further stated, incorrectly, that unit owners were to blame for the current defects in the building by failing to vote for past assessments. Moreover, on or about August 30, 2010 and September 13, 2010, the board of directors and defendant Davidoff informed the unit owners that if they did not vote to approve the assessment, they would risk being held in contempt of court and facing criminal sanctions. The unit owners were also told that if they rejected the assessment, the board of directors would declare the assessment an emergency and approve it by a vote of the directors. Finally, defendant Davidoff informed the unit owners that if they did not approve the financing presented to them, the board of directors would demand lump sums ranging from $20,000 to $50,000, due and payable within thirty days to finance the project, and that if the unit owners did not produce the lump sum payment, the defendant Association immediately would begin foreclosure proceedings against them. The unit owners then voted on the proposed $4.5 million assessment on September 23, 2010, which was the first time in at least the last ten years that an assessment that included repairs to the balconies had been brought to the unit owners for a vote.

The plaintiffs allege five causes of action. Count One alleges breach of contract against the defendant Association; Count Two alleges misrepresentation against the defendant Association; Count Three alleges misrepresentation against defendant Davidoff; Count Four alleges negligence against the defendant Association; and Count Five alleges breach of the obligation of good faith against the defendant Association. The plaintiffs seek a finding of willful misconduct against defendant Davidoff, injunctive relief and damages.

The defendants filed a motion for summary judgment on all five counts of the plaintiffs' operative complaint on the ground that there is no genuine issue of material fact as to any of the claims made.

DISCUSSION

" Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). " The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law." Viola v. O'Dell, 108 Conn.App. 760, 763-64, 950 A.2d 539 (2008). " In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). " The test is whether a party would be entitled to a directed verdict on the same facts ... A motion for summary judgment is properly granted if it raises at least one legally sufficient defense that would bar the plaintiff's claim and involves no triable issue of fact." (Emphasis in original; internal quotation marks omitted.) Byrne v. Burke, 112 Conn.App. 262, 268, 962 A.2d 825 (2009).

COUNT ONE: BREACH OF CONTRACT

The plaintiffs allege that they and the defendant Association were parties to a contract, namely, the declaration, bylaws and amendments of the condominium, and that the defendant breached the contract, thereby causing the plaintiffs to suffer damages. The parties do not agree as to which provisions of the declaration and bylaws govern the approval process for the $4.5 million assessment. The defendants maintain that the work involved constitutes " repairs and replacements" and therefore the proposal could be approved by the Board without a majority vote of the unit owners approving the assessment, as was done. The plaintiffs maintain the work involved constitutes " additions, alterations or improvements" and therefore it must be approved by a majority of the unit owners, which was not done. It appears that a question of fact remains as to whether the work proposed by AWA constitutes repairs and replacements. The fact that the report repeatedly uses the words " restoration, " " replacement" and " repairs" should not be dispositive of the proper classification of the proposed work to be done. At the same time, it appears clear from the report that the primary goal and intent behind all of the work is to repair water infiltration. Whether the scope of work involved constitutes material " repairs" or " improvements" is a genuine issue of material fact that cannot be resolved in this procedural context.

The defendants cite to Greenberg v. Ameridge Condominium Ass'n., Inc., Superior Court, judicial district of Fairfield, Docket No. CV 02 0397025 (April 7, 2003, Rush, J.), in support of their argument that the proposed work on the building constitutes repairs or replacements. Greenberg is not controlling as to the present case. The proposed work is significantly different then that dealt with in Greenberg. Indeed it is possible that some of the proposed work was repairs and some was for improvements. Second, the case is distinguished because the windows that were being replaced in Greenberg needed to be upgraded because the existing windows were not in compliance with governmental regulations. Further, there is no evidence that the proposed " architectural and aesthetic" work approved by the defendant is necessary in order to make the building in compliance with the building code or other municipal regulations.

COUNTS TWO AND THREE: MISREPRESENTATION

The plaintiffs allege the following in Counts Two and Three, which are substantively identical except that Count Two is directed at the defendant Association while Count Three is directed at defendant Davidoff. The defendants made false representations as statements of fact that the directors knew were not true to the plaintiff. The defendants made these statements to induce the plaintiffs and other unit owners to act upon the statements and to approve the assessment. The plaintiffs relied on these false statements to their detriment and, consequently, sustained damages. The defendants argue that the plaintiffs voted to reject the proposed assessment and, therefore, could not have been induced by the defendants to take any action to their detriment— namely, to vote for the proposed assessment.

" A cause of action for intentional misrepresentation is essentially a claim of fraud." (Internal quotation marks omitted.) Reid v. Landsberger, 123 Conn.App. 260, 281, 1 A.3d 1149, cert. denied, 298 Conn. 933, 10 A.3d 517 (2010). " The essential elements of an action in common law fraud ... are that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury ... Under a fraud claim of this type, the party to whom the false representation was made claims to have relied on that representation and to have suffered harm as a result of the reliance ... In contrast to a negligent representation, [a] fraudulent representation ... is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it." (Citation omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Conn. 124, 142, 2 A.3d 859 (2010).

The competing factual allegations set forth in the various documents as well as implications that can be inferred from these documents constitutes, a genuine issue of material fact would exist as to whether the plaintiffs or other unit owners relied upon or acted upon any alleged false representation to their injury.

Aside from the factual issues in this case that arise in analyzing the fourth element of the plaintiffs' claim for intentional misrepresentation, proving the first three elements of that claim pose other factual questions that make it difficult to grant summary judgment. " Allegations such as misrepresentation and fraud present issues of fact ... Moreover, [w]hether evidence supports a claim of fraudulent or negligent misrepresentation is a question of fact ... It is ... well recognized that summary judgment procedure is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions ... It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given to their testimony can be appraised." (Citations omitted; emphasis added; internal quotation marks omitted.) Miller v. Bourgoin, 28 Conn.App. 491, 497-98, 613 A.2d 292, cert. denied, 223 Conn. 927, 614 A.2d 825 (1992); accord Mada Realty, LLC v. Quinnipiac Bank and Trust Co., Superior Court, judicial district of New Haven, Docket No. CV 08 5022794 (January 14, 2011, Burke, J.).

COUNT FOUR: NEGLIGENCE

The plaintiffs allege that the defendant Association had a duty and obligation to conform to a certain standard of conduct for the protection of the plaintiffs against unreasonable risk and that the defendant breached the duty owed to the plaintiffs, thereby causing the plaintiffs to suffer damages. The defendants argue that the business judgment rule applies to the decision of the board of directors and that, accordingly, there is no genuine issue of material fact as to whether the board of directors complied with the ratification procedures set forth in the governing documents in a non-negligent manner. The plaintiffs respond that they have presented facts that overcome the business judgment rule and that support their claim of negligence, as well as bad faith, conflict of interest and intentional acts of deception. The defendants reply that, at best, the defendants can merely show acts suggesting negligence; their remaining assertions of fact are unsupported and, therefore, insufficient to establish a material fact to defeat summary judgment as to their negligence claims.

" The business judgment rule insulates corporate directors from liability for business decisions within the power of the corporation for which the directors have exercised due care." Rosenfield v. Metals Selling Corp., 229 Conn. 771, 785, 643 A.2d 1253 (1994). " [T]he business judgment doctrine [is] a rule of law that insulates business decisions from most forms of review. Courts recognize that managers have both better information and better incentives than they. The press of market forces ... will more effectively serve the interests of all participants than will an error-prone judicial process ... The business judgment rule expresses a sensible policy of judicial noninterference with business decisions made in circumstances free from serious conflicts of interest between management, which makes the decisions, and the corporation's shareholders. Not only do businessmen know more about business than judges do, but the competition in the product and labor markets and in the market for corporate control provides sufficient punishment for businessmen who commit more than their share of business mistakes ... [T]he fact is that liability is rarely imposed upon corporate directors or officers simply for bad judgment and this reluctance to impose liability for unsuccessful business decisions has been doctrinally labeled the business judgment rule." (Citations omitted; internal quotation marks omitted.) Id., at 786-87.

In Powder Farm Park Ass'n., Inc. v. SKF Leeder Hill, LLC, Superior Court, judicial district of New Haven, Docket No. CV 08 4031022 (October 17, 2008, Meadow, J.T.R.) (46 Conn. L. Rptr. 565), cited by the defendants, the court applied the business judgment rule by analogy to review decisions of a condominium association. Quoting from a New York Court of Appeals decision, the court defined the standard of review as follows: " So long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith, courts will not substitute their judgment for the board's. Stated somewhat differently, unless a resident challenging the board's action is able to demonstrate a breach of this duty, judicial review is not available." (Internal quotation marks omitted.) Id., at 568.

There is no reason why the purpose and rationale behind the business judgment rule analogy as articulated in Powder Farm Park should not apply to condominium boards. The question, then, becomes whether the defendants acted within the scope of their authority and in good faith. The defendants offer evidence demonstrating the actions that they took in attempting to address the water infiltration issue in the condominium. While such evidence might suggest good faith on the part of the defendants, it in itself does not necessarily eliminate all genuine issues of fact as to that question. " In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact ... [T]he moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).

The plaintiffs offer a letter from the Stamford department of health and social services dated April 23, 2010 informing defendant Davidoff that Unit 5H is in violation of the public health code. (Plaintiffs' Exhibit B.) The plaintiffs further provide the arrest warrant for defendant Davidoff dated June 30, 2010 for continuing violations of the public health code in Unit 5H. (Plaintiffs' Exhibit D.) Moreover, the plaintiffs contend that the defendants acted deceptively and in bad faith by utilizing Article 24(e) as opposed to Article 32(e) in voting on the proposed assessment and by failing to disclose fully the physical scope and the cost of the project. It appears that, viewing the evidence most favorably to the plaintiffs, the defendants have failed to exclude all real doubt as to the existence of any genuine issue of material fact with regard to whether they acted in good faith. Therefore, it would be premature at this stage to apply the business judgment rule by analogy to the defendants' actions. This conclusion is bolstered by the fact that summary judgment is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions. Miller v. Bourgoin, supra, 28 Conn.App. at 497; see Karwowski v. Fardy, Superior Court, judicial district of New Britain, Docket No. CV 03 0522489 (July 25, 2008, Pittman, J.) (" Questions of motive, intent, and good faith are often inappropriate for resolution on summary judgment, since they are usually fact-dependent.").

" Summary judgment procedure is especially ill-adapted to negligence cases, where ... the ultimate issue in contention involves a mixed question of fact and law, and requires the trier of fact to determine whether the standard of care was met in a specific situation ... [T]he conclusion of negligence is necessarily one of fact ..." (Citations omitted; internal quotation marks omitted.) Michaud v. Gurney, 168 Conn. 431, 434, 362 A.2d 857 (1975).

Accordingly, granting summary judgment for this count is not appropriate.

COUNT FIVE: BREACH OF OBLIGATION OF GOOD FAITH

In their fifth and final count, the plaintiffs allege that the declarations, bylaws and amendments between the parties is governed by General Statutes § 47-200 et seq. (Chapter 828, Common Interest Ownership Act) and, more specifically, General Statutes § 47-211. The plaintiffs claim that the defendants failed to act in good faith in performing their duties and enforcing the declarations, bylaws and amendments, thereby causing the plaintiffs to suffer damages. The defendants argue that the plaintiffs cannot sustain their claim under § 47-211 because that provision does not apply to the defendant Association, as the Condominium Act controls. The defendants further contend that even if § 47-211 does apply, however, the defendants still have properly complied with the declaration, bylaws and amendments of the defendant Association.

Section 47-211 provides: " Every contract or duty governed by ... chapter [828, Common Interest Ownership Act] imposes an obligation of good faith in its performance or enforcement."

The Common Interest Ownership Act (CIOA) applies " to all common interest communities created within this state on or after January 1, 1984." General Statutes § 47-214. Certain provisions of the CIOA do apply " to all common interest communities created in this state before January 1, 1984; General Statutes § 47-216 (emphasis added); but § 47-211, a statute within the CIOA, is not one of them. See id. On the other hand, General Statutes § 47-68a et seq. (Chapter 825, Condominium Act of 1976) applies " to condominiums declared prior to January 1, 1977 ..." (Emphasis added.) General Statutes § 47-90c. " The provisions of chapter 825 do not apply to condominiums created on or after January 1, 1984." Section 47-214. See Mercado v. Hawkins, Superior Court, judicial district of Hartford, Docket No. CV 10 6015771 (May 31, 2012, Woods, J.) [ 54 Conn. L. Rptr. 150] (noting that condominiums are governed by either Chapter 828 or Chapter 825, and describing their applicability).

In this case, the condominium declaration indicates that the condominium was in existence as early as November 5, 1973. (See Defendants' Exhibit M.) Accordingly, the defendant Association is governed by the Condominium Act, and § 47-211 is not applicable. Therefore, the plaintiffs cannot bring a cause of action against the defendants under § 47-211. At the same time, however, " [i]t is axiomatic that the implied duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship." (Internal quotation marks omitted.) Celentano v. Oaks Condominium Ass'n., 265 Conn. 579, 617, 830 A.2d 164 (2003). " Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." (Internal quotation marks omitted.) Gaudio v. Griffin Health Services Corp., 249 Conn. 523, 564, 733 A.2d 197 (1999).

The law is not clear as to whether the implied covenant of good faith and fair dealing applies to the declarations and bylaws of condominium associations created before 1984. The court is not convinced that the common law implied covenant of good faith and fair dealing is not applicable to Condominium Associations created before 1977 and will decline to so hold in this procedural context.

CONCLUSION

For all these reasons the Motion for Summary Judgment is denied.


Summaries of

McCreary v. One Strawberry Hill Ass'n, Inc.

Superior Court of Connecticut
Dec 11, 2012
No. FSTCV106006749 (Conn. Super. Ct. Dec. 11, 2012)
Case details for

McCreary v. One Strawberry Hill Ass'n, Inc.

Case Details

Full title:Jamie McCREARY, et al. v. ONE STRAWBERRY HILL ASSOCIATION, INC., et al.

Court:Superior Court of Connecticut

Date published: Dec 11, 2012

Citations

No. FSTCV106006749 (Conn. Super. Ct. Dec. 11, 2012)