Phyllis Diiorio v. Joann Cocchia et al. (2013)

MEMORANDUM OF DECISION RE MOTION FOR APPOINTMENT OF RECEIVER (# 103.00)

Nature of the Proceeding

This is an action arising after the death of the owner (or part owner) of two parcels of land located in Norwalk.   Plaintiffs claim to have an ownership interest in both parcels.¹  Generally speaking, plaintiffs seek partition of both parcels, and seek an accounting with respect to income and expenses for the parcels based on allegations that defendant Joann Cocchia has been in exclusive/sole control of the properties for a significant period of time.

Plaintiffs have filed a motion for appointment of a receiver (# 103.00), applicable only to the parcel identified in the first count, with respect to which defendant Joann Cocchia is the only defendant.   The motion contains a thorough summary of applicable law relating to appointment of receivers.

Defendant filed an objection (# 105.00).   In her objection, she requested an evidentiary hearing.

The matter was heard on October 28, 2013 (special proceedings calendar).   Plaintiff James Cocchia testified at some length.

Legal Standards

The appointment of a receiver is a statutory proceeding, invoking equity and entrusted to the discretion of the court, pursuant to Chapter 920 of the Connecticut General Statutes (§ 52–504 et seq.).  “The object of appointing receivers is to secure the property in dispute from waste or loss.”   Hartford Federal Savings & Loan Ass'n v. Tucker, 196 Conn. 172, 175, 491 A.2d 1084, cert. denied, 474 U.S. 920, 106 S.Ct. 250, 88 L.Ed.2d 258 (1985).

Discussion

Before discussing the specifics of this case, a more general observation is warranted.   In many cases where a receiver is sought, the application is filed on behalf of a lender who is concerned that security for the debt may be exhausted both in the sense that the property is becoming rundown so that the property is losing value, as well as in the sense that accruing interest and possibly unpaid taxes and other needed costs will cause the debt to balloon beyond the value of the property.   Here, the ultimate goal being sought by plaintiffs is partition by sale, accompanied by an accounting, such that the endgame would provide for suitable adjustments before distribution of proceeds of the sale.  (Mr. Cocchia testified that the property is worth somewhere between $800,000 and $1 million.)

Appointment of a receiver is entrusted to the sound discretion of the court.   It sometimes is described as a drastic remedy.   Although the court does not dispute the sincerity of the concerns expressed by plaintiffs, the situation, as presented to the court, does not justify the extreme remedy of appointment of a receiver.

There are two broad areas of concern as identified by plaintiffs—lack of information, and inadequate maintenance/upkeep.   The court will address them separately.

Lack of Information

A substantial portion of the concerns expressed by plaintiffs related to lack of information—identity of tenants in the building;  the terms of occupancy of tenants;  status of tax payments;  existence of insurance for the property;  access to bank records;  etc.   Given the relatively drastic nature of the appointment of a receiver, courts often will look to alternative remedies for “problems” that are claimed to justify the need for a receiver.

This case has been pending for approximately 6 months.   Recently, there was a flurry of activity with respect to discovery—docket entries # 110.00–112.00 reflect recent efforts by plaintiffs in that regard.   Most or all of the information identified in the preceding paragraph presumably can be obtained through those mechanisms.

Insurance, of particular concern to the court, was discussed during the hearing, and the existing policy was shown to counsel for plaintiffs—the need for proper identification of the owners was identified at that time, with some assurances that corrective action would be taken.   The status of taxes also was discussed at the hearing—although there recently had been a delinquency in payment of taxes, those taxes since have been paid, and the witness testified that he was unaware of any back taxes being owed as of the date of hearing.²

Mr. Cocchia testified that the tenants would not talk to him.   It later was made clear that the apparent reason they would not talk to him is that their attorneys had advised them in that regard.   No efforts have been made to depose any tenant (nor has any attempt been made to depose defendant).

Appointment of a receiver is not intended to be a means for attaining a final result.   If disclosure of appropriate information reveals that the property is not being managed optimally, that is still not a basis for appointment of a receiver, but rather presumably will be taken into account with respect to a final accounting as part of the partition action.   If the information disclosed shows a blatant disregard for preservation of the property, that might form a basis for a renewed request for appointment of a receiver.   Of course, if defendant “stonewalls” with respect to providing information, that might be a basis for revisiting the issue of receivership.   For now, however, issues relating to information or lack thereof do not provide a substantial basis for appointment of a receiver, especially in light of the availability of less drastic procedures.

Inadequate Maintenance/Upkeep

Mr. Cocchia testified that the property looks like a junkyard or dump.   The building needs painting, and there are stumps and other debris on the premises.   From the front, he indicated that the premises looked abandoned, whereas the side of the building looked like a holding area for a landscaping business.  (One of the tenants apparently is (or operates) a landscaping business.)

He further testified that in addition to needing a paint job, it looks like the building needs a new roof.  (Mr. Cocchia acknowledged that he is an electrician, not a roofing expert.)   There is a nominally vacant area within the building that is kept locked (precluding his access to the area), although there was some indication that it actually is being used by a nephew (?).

On cross examination, Mr. Cocchia acknowledge that he never asked his aunt (the defendant) to paint the building, never asked her to clean up the property, never asked her to arrange a meeting with tenants, etc.   Although plaintiffs inferentially would like to have the property listed for sale, he acknowledged that there had not been an explicit refusal to do so.

With respect to financial aspects of maintenance of the property, as previously discussed, he acknowledged that taxes that previously had been in arrears have now been paid, and he is unaware of taxes for the property currently being overdue.   There is no mortgage such that there is no mortgage loan delinquency.   He was unaware of the status of insurance which, as noted earlier, did/does exist for the property although in need of an update as to the identified owners (covered parties).

Finally, Mr. Cocchia testified that the property is generally overgrown and that he does not feel safe in going on the property—and he does not feel welcome there.

The court does not believe that plaintiffs have carried the burden of establishing a need for appointment of a receiver.   There is a large gulf between waste or other conduct justifying appointment of a receiver, and optimal management and maintenance of a property.   The existence of an intra-family dispute provides a context for a claimed refusal to undertake, unilaterally, repainting the building and/or installing a new roof—while defendant is being faulted for not undertaking those expenses, if she did so unilaterally, there is no assurance that there would not be criticism of that as well (excessive or unnecessary expenditures?).

Plaintiffs have not established a factual basis for waste or other improper conduct.   For example, if there were proof of significant leaks from the roof, resulting in damage to the building or damage to tenants' property which in turn resulted in withheld rental payments, with no corrective action being planned or taken, a more plausible claim of waste might be available.   At present, however, the concerns expressed by plaintiffs are subjective, aesthetic, and/or hypothetical if not speculative (based on lack of information rather than negative information);  they have not established the existence of problems of sufficient magnitude and importance to justify appointment of a receiver (with the associated costs).

If circumstances change, or more complete information is adduced, the court might revisit this issue, but based on the current record, plaintiffs' motion must be denied.

POVODATOR, J.

FOOTNOTES

FN1. The allegations of the complaint relating to ownership of the subject property are confusing at best.   Paragraph 2 of the first count seems to indicate that Arthur Cocchia, Jr. is a partial owner even though he is not a party to this litigation.   Later, ¶¶ 9–11 contain equivocal allegations that defendant Joann Cocchia either is asserting control on behalf of Arthur Cocchia, Jr. or is acting as his heir or successor (“9. The plaintiffs hereby [join] as defendants the testate and intestate successors of Arthur Cocchia, Jr. deceased or believed to be deceased, and all persons claiming by [through], or under Arthur Cocchia, Jr., herein the defendant, Joann Cocchia, his widow.”  (Emphasis added))..  FN1. The allegations of the complaint relating to ownership of the subject property are confusing at best.   Paragraph 2 of the first count seems to indicate that Arthur Cocchia, Jr. is a partial owner even though he is not a party to this litigation.   Later, ¶¶ 9–11 contain equivocal allegations that defendant Joann Cocchia either is asserting control on behalf of Arthur Cocchia, Jr. or is acting as his heir or successor (“9. The plaintiffs hereby [join] as defendants the testate and intestate successors of Arthur Cocchia, Jr. deceased or believed to be deceased, and all persons claiming by [through], or under Arthur Cocchia, Jr., herein the defendant, Joann Cocchia, his widow.”  (Emphasis added)).

FN2. The court notes that the status of tax payments is or should be readily ascertainable by anyone, at any time, upon inquiry at the relevant tax collector's office..  FN2. The court notes that the status of tax payments is or should be readily ascertainable by anyone, at any time, upon inquiry at the relevant tax collector's office.

Povodator, Kenneth B., J.