Cedarwood Hill Estate Condominium Association v. Nancy A. Danise (2013)

MEMORANDUM OF DECISION RE JUDGMENT OF STRICT FORECLOSURE

I

BACKGROUND

This is an action to foreclose a statutory lien for common expense assessments, brought by the plaintiff, Cedarwood Hill Estate Condominium Association, against the defendant, the Connecticut Housing Finance Authority.   On October 7, 2013, the court denied the plaintiff's motion for strict foreclosure without prejudice.   At that time, the issue in dispute between the parties involved the scope of the plaintiff's priority lien for “common expense assessments” pursuant to General Statutes § 47–258(b), as amended by No. 13–156, § 1, of the 2013 Public Acts (P.A. 13–156),¹ which became effective upon passage and is applicable to all actions pending at that time, including the present case.   The parties briefed this issue and the court heard argument on October 7, 2013.   The motion for strict foreclosure was denied without prejudice because the claim for common expense assessments, as reflected in the plaintiff's affidavit of debt, was found to be insufficient.   The motion for strict foreclosure was thereafter reclaimed with a new affidavit of debt and heard by the court on October 28, 2013.

The specific question presented is whether “special assessments,” in addition to ordinary “common charges,” ² are “common expense assessments ․ based on a budget adopted at least annually by the association.”   If so, they are included in the newly expanded nine-month priority lien provided for in § 47–258(b), as amended by P.A. 13–156.

The plaintiff asserts that the collection of common expense assessments is critical to the proper functioning of condominium associations and that the purpose of the newly enacted nine-month ³ priority lien is to provide greater financial stability to condominium associations in the event of a foreclosure.   The plaintiff also points to new language added to § 47–258(b) by P.A. 13–156 that specifically excludes from the priority lien “any late fees, interest or fines which may be assessed by the association during the nine-month period.”   The plaintiff contends that, in contrast to special assessments, these specifically excluded expenses are not common to all unit owners, indicating that the special assessments in this case, which are common to all unit owners, are common expense assessments for the purposes of § 47–258.

The defendant counters that special assessments are not common expense assessments and that they are, therefore, “other assessments made by the association” under § 47–258(b) that are generally excluded from the priority lien under the existing language of the statute.   The defendant further argues that special assessments are excluded from the priority lien because they are not within a “budget adopted at least annually by the association” as required by the existing language of § 47–258(b).

For reasons set forth in this memorandum, the court concludes that special assessments are included in the nine-month priority lien based upon the affidavit of debt filed in this case.

II

DISCUSSION

The term “common expense assessment,” to which the priority lien applies, is existing statutory language, unamended by P.A. 13–156, and is undefined in the Common Interest Ownership Act (COIA).  General Statutes § 47–202.   COIA, however, does define the term “assessment” to mean “the sums attributable to a unit and due the association pursuant to section 47–257.”  General Statutes § 47–202(3).   COIA also defines the term “common expenses” to mean “expenditures made by, or financial liabilities of, the association, together with any allocations to reserves.”  General Statutes § 47–202(7).

Common expenses assessments are generally due from unit owners to an association by operation of § 47–257, which provides, in relevant part, at subsection (a), that “assessments shall be made at least annually, based on a budget adopted at least annually by the association ․” Assessments for common expenses, based upon budgets adopted by associations, are then allocated to unit owners pursuant to § 47–257, generally in accordance with their ownership interest pursuant to the condominium declaration.  General Statutes § 47–257(a) and (b).  These common expense assessments form the basis for a condominium association's statutory lien, which receives the benefit of a priority position to the extent it “would have become due in the absence of acceleration during the nine months immediately preceding [the foreclosure] ․” General Statutes § 47–258(b), as amended by P.A. 13–156, § 1.

Condominium association budgets and special assessments are adopted pursuant to procedures set forth in General Statutes § 47–261e.⁴  The process for adopting a condominium budget is somewhat unusual in that it does not require an affirmative vote of the unit owners to approve a budget.  General Statutes § 47–261e.   Instead, pursuant to the procedures set forth in § 47–261e(a), a budget proposed by the association's executive board is generally deemed adopted, unless rejected by a majority vote of the unit owners.   The executive board may also propose and effectuate special assessments totaling up to 15 percent of the annual budget without the approval of the unit owners.   General Statutes § 47–261e(b).  Special assessments totaling over 15 percent must, however, follow procedures similar to those applicable to the adoption of the underlying budget, which are also effective absent rejection by a majority of the unit owners.  General Statutes § 47–261e(b).  Further, the executive board may enact an emergency special assessment by a two-thirds super majority vote.  General Statutes § 47–261e.

In each of these budgeting procedures, the executive board appears to be acting on behalf of the association, either by initiating the budget and assessment process, which may be rejected by unit owners under certain circumstances, or by acting alone under other statutorily prescribed circumstances.   See General Statutes § 47–261e(a) through (c).  The plaintiff asserts that these budget procedures for special assessments are within the meaning of the language of § 47–257(a), to which the priority lien applies.   Namely, because they are “based on a budget adopted at least annually by the association ” under § 47–257(a), they are, under § 42–258(b), “common expense assessments based on the periodic budget adopted by the association pursuant to subsection (a) of section 47–257 ․” (Emphasis added.)

The defendant asserts that special assessments should not be included in the priority lien based on an existing provision of § 47–258(b), unamended by P.A. 13–156, which generally excludes “other assessments made by the association” from the nine-month priority lien.   The plaintiff disagrees and points to new language, added by P.A. 13–156, clearly and unambiguously excluding from the priority lien “late fees, interest or fines which may be assessed by the association during the nine-month period ․” The plaintiff asserts that, because special assessments are not specifically excluded, they should be included within the nine-month priority lien for common expense assessments.

Although this new exclusionary language clarifies what should be excluded from the priority lien, the existing language of the statute does not affirmatively and specifically identify the scope of common expense assessments included within the priority lien.   Any assessments beyond the nine-month priority lien period are excluded, even though they are budgeted, common expense assessments.   Similarly, late fees, interest, and fines are excluded by the new language of the public act, and they do not otherwise appear to meet the common sense definition of common expense assessments based on a budget adopted at least annually by the association.   See General Statutes §§ 47–257(a) and 47–258(b).  These newly enacted exclusions appear to be categorically different from expenses shared in common by unit owners, as they apply only to specific units and their owners.   See General Statutes §§ 47–257(a) and 47–258(b).  This categorical difference supports the plaintiff's position that the special assessments in this case, which are common to all unit owners, are common expense assessments for the purposes of § 47–258(b).

A potential problem with this analysis is that each of these exclusions discussed is clearly based upon the language of the statute, as amended, potentially making superfluous or redundant the language of General Statutes § 47–258(b) that provides that the nine-month priority for common expense assessments “does not affect ․ the priority of liens for other assessments made by the association.”   For this reason, the defendant argues that “other assessments” in § 47–258(b) includes special assessments.

“It is a basic tenet of statutory construction that the legislature [does] not intend to enact meaningless provisions ․ Because [e]very word and phrase [of a statute] is presumed to have meaning ․ [a statute] must be construed, if possible, such that no clause, sentence or word shall be superfluous, void or insignificant.”  (Internal quotation marks omitted.)  Lopa v. Brinker International, Inc., 296 Conn. 426, 433, 994 A.2d 1265 (2010);  see also Yeager v. Alvarez, 134 Conn.App. 112, 121–22, 38 A.3d 1224 (2012) (applying Lopa, supra, 433, in interpreting General Statutes § 31–293(a) to avoid redundancies).   Nevertheless, a trial court is instructed that “[a] statute is enacted as a whole and must be read as a whole rather than as separate parts or sections ․ Further, [w]ords in a statute must be given their plain and ordinary meaning ․ unless the context indicates that a different meaning was intended.”  (Citation omitted;  internal quotation marks omitted.)  Wiseman v. Armstrong, 269 Conn. 802, 810, 850 A.2d 114 (2004).

Although the court has not conducted a comprehensive review of all “other assessments” under § 47–258(b) that may be imposed pursuant to COIA, the court has found at least one assessment—under § 47–257(e) for damage resulting from willful misconduct, applicable exclusively to a responsible unit owner—which does not appear, on its face, to be a common expense assessment.   Therefore, including special assessments as common expense assessments does not make superfluous the language in § 47–258(b) that generally excludes “other assessments made by the association” from the priority lien.

III

CONCLUSION

The court concludes that the special assessments questioned by the defendant in this case are not specifically excluded from the priority lien by the language of § 47–258(b), as amended by P.A. 13–156, as they are clearly not excluded as “late fees, interest and fines ․” The court finds that these challenged special assessments are consistent within the ordinary meaning of “common expense assessments” in § 47–258(b), for which a priority lien is provided by that statute.   The court further concludes that, consistent with the budget procedures set forth in § 47–261e, the special assessments in this case are “based on the periodic budget adopted by the association pursuant to subsection (a) of section 47–257 ․” General Statutes § 47–258(b).  Such special assessments are, therefore, includable in the priority lien provided for in § 47–258(b).

IV

FINDINGS AND JUDGMENT

The motion for strict foreclosure was originally denied without prejudice because the claim for common expense assessments, as reflected in the plaintiff's affidavit of debt, was found to be insufficient.   The motion for strict foreclosure is now granted, as the defendant mortgagee has appeared with a lien in excess of the fair market value of the property, and a law day is set for December 3, 2013.

The court finds that all defaults are in order and that the defendant, Nancy A. Danise, is not in the military, based upon a military affidavit filed with the court.   The fair market value of the condominium is found to be $38,000.   The nine-month priority debt is found to be $5,429.49, consistent with the new affidavit of debt filed on October 17, 2013.   This priority lien includes monthly common charges and special assessments accrued within the nine-month priority period pursuant to § 47–258(b), as amended by P.A. 13–156.   The affidavit of debt also asserts that these common expense assessments were based upon the periodic budget adopted by the plaintiff in accordance with § 47–257(a), as required by § 47–258(b) and as duly adopted pursuant to § 47–261e.   In addition, the court finds that the total statutory debt owed to the plaintiff is $10,916.33, as well as an appraisal fee of $350, attorneys fees of $2,200, and a title search fee of $225.

BY THE COURT

MARK H. TAYLOR, J.

FOOTNOTES

FN1. P.A. 13–156 provides in relevant part:  “Subsection (b) of section 47–258 of the general statutes is repealed and the following is substituted in lieu thereof ․ [The] In all actions brought to foreclose a lien under this section or a security interest described in subdivision (2) of this subsection, the lien is also prior to all security interests described in subdivision (2) of this subsection to the extent of (A) an amount equal to the common expense assessments based on the periodic budget adopted by the association pursuant to subsection (a) of section 47–257 which would have become due in the absence of acceleration during the [six] nine months immediately preceding institution of an action to enforce either the association's lien or a security interest described in subdivision (2) of this subsection, excluding any late fees, interest or fines which may be assessed by the association during the nine-month period, and (B) the association's costs and reasonable attorneys fees in enforcing its lien.   A lien for any assessment or fine specified in subsection (a) of this section shall have the priority provided for in this subsection in an amount not to exceed the amount specified in subparagraph (A) of this subsection.   This subsection does not affect the priority of mechanics' or materialmen's liens or the priority of liens for other assessments made by the association.”  (Emphasis added;  bracketed language in original, representing repealed language;  underscored language in original, representing new language.).  FN1. P.A. 13–156 provides in relevant part:  “Subsection (b) of section 47–258 of the general statutes is repealed and the following is substituted in lieu thereof ․ [The] In all actions brought to foreclose a lien under this section or a security interest described in subdivision (2) of this subsection, the lien is also prior to all security interests described in subdivision (2) of this subsection to the extent of (A) an amount equal to the common expense assessments based on the periodic budget adopted by the association pursuant to subsection (a) of section 47–257 which would have become due in the absence of acceleration during the [six] nine months immediately preceding institution of an action to enforce either the association's lien or a security interest described in subdivision (2) of this subsection, excluding any late fees, interest or fines which may be assessed by the association during the nine-month period, and (B) the association's costs and reasonable attorneys fees in enforcing its lien.   A lien for any assessment or fine specified in subsection (a) of this section shall have the priority provided for in this subsection in an amount not to exceed the amount specified in subparagraph (A) of this subsection.   This subsection does not affect the priority of mechanics' or materialmen's liens or the priority of liens for other assessments made by the association.”  (Emphasis added;  bracketed language in original, representing repealed language;  underscored language in original, representing new language.)

FN2. The court notes, as a preliminary matter, that the terms “common expense assessments,” “special assessments” and “common charges” are undefined in the Common Interest Ownership Act (COIA).  General Statutes § 47–202..  FN2. The court notes, as a preliminary matter, that the terms “common expense assessments,” “special assessments” and “common charges” are undefined in the Common Interest Ownership Act (COIA).  General Statutes § 47–202.

FN3. Until the enactment of P.A. 13–156, the priority lien was for a period of six months..  FN3. Until the enactment of P.A. 13–156, the priority lien was for a period of six months.

FN4. General Statutes § 47–261e provides, in relevant part:(a) The executive board, at least annually, shall adopt a proposed budget for the common interest community for consideration by the unit owners.   Not later than thirty days after the adoption of a proposed budget, the executive board shall provide to all unit owners a summary of the budget, including a statement of the amount of any reserves, and a statement of the basis on which such reserves are calculated and funded.   Simultaneously, the board shall set a date not less than ten days or more than sixty days after providing the summary for either a meeting of the unit owners or a vote by ballot without a meeting to consider approval of the budget.   If, at that meeting or in the vote by ballot, a majority of all unit owners or any larger number specified in the declaration votes to reject the budget, the budget shall be rejected.   If, at that meeting or in the vote by ballot, a majority of all unit owners or any larger number specified in the declaration does not vote to reject the budget, the budget shall be approved.   The absence of a quorum at such meeting or participating in the vote by ballot shall not affect rejection or approval of the budget.   If a proposed budget is rejected, the budget last approved by the unit owners continues until unit owners approve a subsequent budget.(b) The executive board, at any time, may propose a special assessment.   Not later than thirty days after adoption of a proposed special assessment, the executive board shall provide to all unit owners a summary of the proposed special assessment.   Unless the declaration or bylaws otherwise provide, if such special assessment, together with all other special and emergency assessments proposed by the executive board in the same calendar year, do not exceed fifteen percent of the association's last adopted periodic budget for that calendar year, the special assessment is effective without approval of the unit owners.   Otherwise, the board shall set a date not less than ten days or more than sixty days after providing the summary for either a meeting of the unit owners or a vote by ballot without a meeting to consider approval of the special assessment.   If, at such meeting or in the balloting, a majority of all unit owners or any larger number specified in the declaration votes to reject the special assessment, the special assessment shall be rejected.   If, at such meeting or in the balloting, a majority of all unit owners or any larger number specified in the declaration does not vote to reject the special assessment, the special assessment shall be approved.   The absence of a quorum at such meeting or participating in the vote by ballot shall not affect the rejection or approval of the special assessment.If the executive board determines by a two-thirds vote that a special assessment is necessary to respond to an emergency:  (1) The special assessment becomes effective immediately in accordance with the terms of the vote;  (2) notice of the emergency assessment must be provided promptly to all unit owners;  and (3) the executive board may spend the funds paid on account of the emergency assessment only for the purposes described in the vote ․(Emphasis added.).  FN4. General Statutes § 47–261e provides, in relevant part:(a) The executive board, at least annually, shall adopt a proposed budget for the common interest community for consideration by the unit owners.   Not later than thirty days after the adoption of a proposed budget, the executive board shall provide to all unit owners a summary of the budget, including a statement of the amount of any reserves, and a statement of the basis on which such reserves are calculated and funded.   Simultaneously, the board shall set a date not less than ten days or more than sixty days after providing the summary for either a meeting of the unit owners or a vote by ballot without a meeting to consider approval of the budget.   If, at that meeting or in the vote by ballot, a majority of all unit owners or any larger number specified in the declaration votes to reject the budget, the budget shall be rejected.   If, at that meeting or in the vote by ballot, a majority of all unit owners or any larger number specified in the declaration does not vote to reject the budget, the budget shall be approved.   The absence of a quorum at such meeting or participating in the vote by ballot shall not affect rejection or approval of the budget.   If a proposed budget is rejected, the budget last approved by the unit owners continues until unit owners approve a subsequent budget.(b) The executive board, at any time, may propose a special assessment.   Not later than thirty days after adoption of a proposed special assessment, the executive board shall provide to all unit owners a summary of the proposed special assessment.   Unless the declaration or bylaws otherwise provide, if such special assessment, together with all other special and emergency assessments proposed by the executive board in the same calendar year, do not exceed fifteen percent of the association's last adopted periodic budget for that calendar year, the special assessment is effective without approval of the unit owners.   Otherwise, the board shall set a date not less than ten days or more than sixty days after providing the summary for either a meeting of the unit owners or a vote by ballot without a meeting to consider approval of the special assessment.   If, at such meeting or in the balloting, a majority of all unit owners or any larger number specified in the declaration votes to reject the special assessment, the special assessment shall be rejected.   If, at such meeting or in the balloting, a majority of all unit owners or any larger number specified in the declaration does not vote to reject the special assessment, the special assessment shall be approved.   The absence of a quorum at such meeting or participating in the vote by ballot shall not affect the rejection or approval of the special assessment.If the executive board determines by a two-thirds vote that a special assessment is necessary to respond to an emergency:  (1) The special assessment becomes effective immediately in accordance with the terms of the vote;  (2) notice of the emergency assessment must be provided promptly to all unit owners;  and (3) the executive board may spend the funds paid on account of the emergency assessment only for the purposes described in the vote ․(Emphasis added.)

Taylor, Mark H., J.