Joan F. Welch v. Stony Brook Gardens (2013)

MEMORANDUM OF DECISION

This cause of action is based on a dispute between the plaintiff, Joan Welch, and the defendant, Stony Brook Gardens Cooperative, Inc. (Hereinafter referred to the Cooperative).   The plaintiff has been an occupant and a member of the Cooperative since 1965.   At that time the plaintiff and her now deceased husband entered into a mandatory occupant agreement containing the rights and obligations of the respective unit owner and the Cooperative.   The plaintiff claims that the Cooperative has failed to comply with the terms and conditions of the 1965 Occupant Agreement which specifically provided that the Cooperative would reimburse the unit owner for certain expenses with respect to the repairs and maintenance to the exterior of the member's unit.   The plaintiff initially filed a small claims suit seeking $5,000 in damages for the cost of the necessary painting the exterior of her unit.   The defendants transferred the claim to the Superior Court where the plaintiff then filed a two-count complaint.

The first count is a claim of Breach of Contract and the second count is a claim of a violation of the Covenant Of Good Faith and Fair Dealing.   The defendant has filed two special defenses, claiming the Occupancy Agreement has been amended to preclude the expenses sought by the plaintiffs and that the plaintiff has waived any rights to her claim as a result of her participation in the Cooperative management affairs.

Based on the credible testimony, exhibits and post-trial briefs, the court has made the following factual and legal conclusions.

By way of background, the Cooperative was created by the filing of certain required documents, specifically, a Declaration in the form of an agreement with the Federal Housing Authority, Bylaws and a form Occupancy Agreement to be signed by the Cooperative and any prospective member and occupant of a unit.

The Occupancy Agreement contained a list of the rights and obligations of the Cooperative and the unit owner, including certain expenses to be paid by the Cooperative with respect to the exterior of the unit.   Since 1965 there have been four subsequent Occupancy Agreements but each is only signed by a unit occupant becoming a member after enactment of the revised occupancy agreements.   As such, the plaintiff and the Cooperative, to this day, operate under the 1965 agreement.

We are primarily concerned with two sections of the 1965 Occupancy Agreement:  “Article 11.   Repairs” section (a) requires the member to provide repairs or maintenance to their unit necessitated by negligence or misuse, re-declaration of their unit and repairs and maintenance of their range or refrigerator.

Section (b) requires the corporate Corporation to provide and pay for all necessary repairs, maintenance and replacement except those specified in section (a).

Article 14 of the occupancy Agreement requires the member to abide by “the charter, bylaws, rules and regulations of the corporation and any amendments thereto.”   In 1965, the Cooperative had established no rules and regulations.   In 1974 the Cooperative established its first set of rules and regulations, which as is customary, was limited primarily to the regulation and expenses of the areas used in common by all members as opposed to the individual units.

In 1983 the nine-member Board of Directors held a meeting to discuss the rules and regulations.   There was no prior agenda nor were any subsequent minutes distributed.   At the meeting the Board of Directors moved to amend the rules and regulations to, in effect, amend Article 11 paragraph (a.) of the Occupancy Agreement.   The amendment changed the requirement of the Cooperative supplying the expenses to paint the exterior of a unit with the exception of providing the paint.

In 2007 the cooperative replaced sections of the exterior siding of the plaintiff's unit and painted over the replaced siding with a different color than the rest of the unit.   The plaintiff repeatedly requested since that period of time that the Cooperative provide the expenses for painting the exterior of the unit.   As a result of being exposed certain areas of the exterior deteriorated somewhat.   The Cooperative filed a notice to the plaintiff that if the exterior of her unit was not painted and repaired she would be charged a fine for violating the rules and regulations.

The plaintiffs repeatedly contested that the 1965 Occupancy Agreement had never been amended by the membership, as is required and, in fact, a proposal to amend all of the occupancy agreements was defeated by the membership.   Both parties agreed that the 1965 occupancy agreement could not be amended.

It is the Cooperative's position, however, that by unilaterally amending the ancillary rules and regulations they had collaterally amended the 1965 Occupancy Agreement which required compliance with non-delineated rules and regulations.   During her testimony, the Chairman of the Board of Directors confirmed that the Board could unilaterally nullify any provision of an Occupancy Agreement, including any of the specified obligations on the part of the Cooperative by simply amending the rules and regulations accordingly, which this court finds as unacceptable.   At the outset it is the finding of the court that the 1965 operation agreement is an extension of the Cooperative's Bylaws, as defined in C.G.S. Sec. (5) “bylaws.”   The required procedure for amending the Bylaws was never followed and, in fact, an attempt to do so was defeated by a vote of the entire membership.

In addition, C.G.S. Sec. 47–10 “Unconscionable Contracts ․” provides in Section (b) “The court, on finding as a matter of law that a contract or contract clause was unconscionable at the time of the contract was made may refuse to enforce a contract enforce the remainder of the contract without the unconscionable clause or limit the application of any unconscionable clause in order to avoid an unconscionable result.”

It is the finding of this court that Cooperative's attempt to amend the occupation agreement by means of a collateral amendment through the rules and regulations established by a nine-member Board of Directors is unconscionable and unenforceable.

The initial documents enacted by the Cooperative listed its declaration, its bylaws and the mandatory occupancy agreement.   In sequence, the declaration outlines the structure of the Cooperative managing body and revenue management.   The Occupancy Agreement, as a Bylaw, provides the rights and obligations including expenses existing between the cooperation and the individual unit owners.   Omitted from those initial documents, although referenced, were defined rules and regulations concerning the use of common areas.   It is the opinion of the court that the intent of reference to rules and regulations in the initial documents and, in fact in the first establishment of rules and regulations was limited to rules and regulations concerning the common areas used by the entire membership and not the individual obligations between the Cooperative and the unit owners.

It is the finding of the court that the plaintiff has established its burden of proof with respect to Count One, Breach of Contract.   With respect to Count Two, C.G.S. Sec. 47–211 requires every contract or duty governed by the Common Interest Ownership Act imposes an obligation of good faith in its performance or enforcement.   It is the opinion of the court that the conduct of the Cooperative that could in not only ignoring the rights of the plaintiff by attempting to nullify or unilaterally amend her contract rights and seeking retribution for her claims by threatening monetary penalties violates that Covenant and finds for the plaintiff with respect to the second count.

With respect to the special defenses the court finds that the defendant, did in fact, breach the Occupancy Agreement which was not properly amended.   It finds that rather than waiving her rights, the plaintiff was admirably tenacious in consistently seeking simple compliance with her initial contract with the Cooperative.

Accordingly, the court awards the plaintiff $5,000 in damages for the necessary painting of the exterior of the unit as well as an order that the Cooperative complete any necessary repairs required for the exterior of the unit.   It is also a finding of the court that the plaintiff is entitled to costs and attorneys fees by prevailing in a small claims complaint which the defendants transferred to the regular court necessitated her engaging an attorney.  C.G.S. Sec. 52–251a.   A postjudgment hearing will be held to determine the reasonable attorneys fees and cost.

Judgment is entered accordingly.

GILARDI, J.T.R.

Gilardi, Richard P., J.T.R.