Elaine Erwin Matulis v. Robert McCabe, Executor (2013)

MEMORANDUM OF DECISION

I

PROCEDURAL HISTORY

The plaintiff, Elaine Erwin Matulis, commenced this civil action against the defendant, Robert McCabe, Executor of the Estate of Valerie McCabe.   The operative complaint is the pleading filed on August 20, 2009, entitled Second Revised Complaint.   The first count sets forth a claim for partition of a parcel of real property and improvements owned by the parties and located at 359 Wethersfield Road, Berlin, Connecticut.¹  The second count alleges a claim for a declaratory judgment as to the plaintiff's claim for reimbursement of work performed and expenses incurred in the management of the property.   In the third count, the plaintiff alleges tortious interference and asserts a claim for lost rental income.   The plaintiff contends that the defendant's actions had prohibited her from renting the property.

In response, the defendant set forth his answer, special defenses, counterclaims, and setoff in pleadings dated April 18, 2011, and April 17, 2013.²  Several of the counterclaims were disposed of through summary judgment and a motion to strike.³

The case was tried to the court on April 9, 2013, April 10, 2013, April 11, 2013, and April 16, 2013.   During the trial, the parties presented the testimony of numerous witnesses and introduced into evidence many exhibits.   After the conclusion of the trial, the parties filed with the court post-trial briefs and reply briefs.

II

DISCUSSIONA. Evidentiary Issues From Trial

There are a number of evidentiary issues that must be addressed.   The court and counsel agreed that evidence would be presented subject to preserved objections and the court would rule upon them in the memorandum of decision.   They are as follows:

Defendant's Exhibits

C—Wethersfield tax assessor's field card;

TT—July 24, 2006 Uniform Residential Appraisal Report;

UU—September 27, 2008 Uniform Residential Appraisal Report;

VV—July 25, 2011 Uniform Residential Appraisal Report.

Objections were made by plaintiff's counsel on the basis of relevance.   The court finds that there is some relevance to this proffered evidence, as it will assist the trier of fact in understanding the issues presented in the matter.   Accordingly, the objections are overruled.   The clerk of the court is directed to mark the documents as full exhibits.

B. Facts

From the credible evidence presented at trial and the stipulations, the court finds the following relevant facts.

The plaintiff is Elaine Erwin Matulis.   Mrs. Matulis resides in Berlin, Connecticut.   She is currently employed as a nurse consultant by the State of Connecticut Department of Public Health.   Her educational background includes a bachelor of science degree in nursing, and a masters of business administration.   Mrs. Matulis owns and manages a number of residential rental properties and a commercial property.   She has managed rental property since 1975 and has expertise in that field.

The plaintiff's mother was Jessie K. Erwin.   She co-owned an old farmhouse and real property with her sister, Valerie McCabe.   The property is located at 359 Wethersfield Road, Berlin, Connecticut.   On October 10, 1998, Mrs. Erwin quit claimed her one-half interest in the property to Mrs. Matulis.  (Plaintiff's Exhibit 31.)   Mrs. Erwin died the following day.   The house and property had been a part of the plaintiff's grandparent's farm.   The house was built around 1910 and was in need of many repairs.

In October 1998, the house was rented to a third party.   Valerie McCabe's health had declined and she was unable to manage the property.   She had two adult sons, Robert McCabe and John McCabe.   Robert McCabe graduated from the University of Connecticut in 1973 and became an arborist.   In 1980, he moved with his family to New Hampshire and continued to work as an arborist.   He currently resides in Merrimack, New Hampshire.

John McCabe has numerous degrees of higher education, including a Ph.D. degree in physics from Brown University and a J.D. degree from George Washington University.   He has worked as a university researcher and professor at institutions around the world.   He has worked as a patent attorney for a number of years.   In the mid–1990's, he lived in Houston, Texas for several years.   Valerie McCabe lived with him in Texas for a period of time in 1997.

In October 1998, John McCabe moved to Quincy, Massachusetts and lived there until April 2000.   He then worked in France for a period of time.   On June 1, 2000, he relocated to the state of New Jersey.   He currently resides in Scotchplains, New Jersey.

On June 18, 1997, Valerie McCabe appointed her son, Robert McCabe, as her general power of attorney.  (Defendant's Exhibit E.) This occurred because of her declining health.

After Mrs. Matulis acquired her mother's interest in the property in 1998, a discussion took place between her and Robert McCabe.   It was at this time that it was agreed that she would manage the property and receive a fee for her services.   Mrs. Matulis initially paid herself one month's rent, and later a ten percent management fee for her services.   Jessie Erwin, and later her estate, had no objection to this arrangement.   This was a mutually beneficial situation, because Mrs. Matulis, unlike the McCabes, lived in the area and had requisite property management skills.   Her duties included, among other things, collecting rents, securing tenants, property maintenance and paying all the bills associated with the property.

Mrs. Matulis maintained a detailed, written record of her work.  (Plaintiff's Exhibits 1, 2, 3.) This included entering into written lease agreements with tenants.  (Plaintiff's Exhibits 4, 5.) During the time that she managed the property, she maintained the rental monies in four accounts, all of which were in her own name.   Jessie Erwin, and later her estate, had no concern about this arrangement until 2008.   The accounts were referred to as the “common fund.”   (Plaintiff's Exhibits 7, 8.) These accounts earned income.  (Plaintiff's Exhibits 8, 9.) Mrs. Matulis was not provided with a joint banking account in the names of Jessie Erwin and Valerie McCabe at the time she commenced her property management duties for 359 Wethersfield Road.

Mrs. Matulis retained the services of a certified public accountant named Frank Marrocco to prepare the tax records for the property.   The tax statement utilized by the IRS is called a “Supplemental Income and Loss” statement, or a Schedule E form.  (Plaintiff's Exhibit 10.)   It must be filed on an annual basis.   The Schedule E form requires that an itemization of all rental income and expenses be disclosed.   This includes any management fees.  Id. On a yearly basis, Mrs. Matulis provided Mrs. McCabe and Robert McCabe with the completed IRS Schedule E forms.

In a letter dated January 6, 2000, Mrs. Matulis wrote to John and Robert McCabe and expressed an interest in purchasing the farmhouse.  (Plaintiff's Exhibit 13.)   These gentlemen did not respond to her letter.   Mrs. Matulis had expressed an interest in purchasing the house on several occasions prior to, and after, this letter.   There was never a discussion of a purchase price.

Thereafter, in a letter dated March 25, 2004, Mrs. Matulis informed Robert McCabe of numerous maintenance issues with the house, including a leak in the tank used for heating oil.  (Plaintiff's Exhibit 14.)   She also offered to disburse some monies to him from the common fund.  Id. The letter also notes that the 2003 IRS Schedule E was enclosed.  Id. Mr. McCabe did not respond to this correspondence.

In 2005, Mrs. Matulis wrote to Robert McCabe and enclosed the IRS Schedule E tax information.  (Plaintiff's Exhibit 15.)   In this letter, she expressed her concern about the asbestos siding on the house.  Id. She concluded by stating “call or write with your thoughts.”  Id. Mr. McCabe did not respond to this correspondence.

In a letter dated April 10, 2005, Mrs. Matulis again provided Robert McCabe with the income tax information.  (Plaintiff's Exhibit 16.)   She also informed him that the house needed to be sided or painted.  Id. She concluded by stating, “As I wrote last year there is some money left over.   If you need some let me know.   In the bank I have $ and money left from Fidelity.”  Id. Mr. McCabe did not respond to the April 10, 2005 letter.

On April 13, 2005, Valerie McCabe died.  (Defendant's Exhibit F.) The estate was probated in the Court of Probate, District of Berlin.   In her last will and testament she appointed Robert McCabe as her executor.  (Defendant's Exhibit D.)

In 2006, Mrs. Matulis wrote to Robert McCabe, enclosing the IRS Schedule E form for tax year 2005.  (Plaintiff's Exhibit 17.)   Again she offered to disburse funds from the common fund and inquired about his future plans for the house.  Id. Mr. McCabe did not respond to this letter.

Thereafter, on March 27, 2007, Mrs. Matulis wrote to Robert McCabe and included the IRS Schedule E form.  (Plaintiff's Exhibit 18.)   Again she offered him monies from the common fund.  Id. Mrs. Matulis also requested a copy of a real estate appraisal that had been done of the property.  Id. Mr. McCabe did not respond.

In a letter dated April 26, 2007, Mrs. Matulis again requested a copy of the appraisal report.  (Plaintiff's Exhibit 19.)   The correspondence included fourteen items which Mrs. Matulis felt needed to be repaired or replaced.   Id. Mr. McCabe did not respond to this letter.

In 2008, the personal relationship between Mrs. Matulis and Mr. McCabe deteriorated significantly.   After years of showing very little interest in the property, Robert McCabe, acting through his attorney sought various records and a distribution of common funds.  (Plaintiff's Exhibits 20, 21, 22, 23.)   These events occurred in part because of several occurrences.   The probate court exerted pressure on Mr. McCabe to perform his duties as executor and finalize his mother's estate.   Mr. McCabe was now concerned that Mrs. Matulis was misappropriating common fund monies and attempting to gain sole ownership of the property for less than market value.   Finally, a dispute arose concerning repairs to the farmhouse.  (Plaintiff's Exhibits 24, 25.)   In response to Robert McCabe's numerous requests, Mrs. Matulis collected documents, including bank statements, and provided them to him.

In June 2008, Mrs. Matulis retained a home inspection company to evaluate the house.  (Plaintiff's Exhibit 6.) The inspection was performed and a report was produced.  Id. Her motivation for retaining the company was to ascertain what repairs needed to be accomplished so that the property could be placed on the real estate market.   A copy of the report was provided to Robert McCabe.   The house was in need of a substantial amount of repair work.  (Plaintiff's Exhibit 11.)   One of the major issues with the house was the presence of asbestos siding which had deteriorated badly.  Id. Mrs. Matulis recognized the need to rectify the situation.

In a letter dated June 16, 2008, the attorney for Mr. McCabe demanded that she “cease and desist” from having the house sided.  (Plaintiff's Exhibit 24.)   Mrs. Matulis responded in a letter dated June 23, 2008, and stated “[t]he current tiles are discolored, chipped and have mold/fungus growing on the entire back face of the siding.   The siding is asbestos, and there are environmental issues ․ this is an expense I have planned for years.   A contract was signed over a month ago, and materials are on site and almost half as a deposit has been paid ․ Contracts are legally binding and the rescission period is long since expired.   Therefore, it is my intention to honor the contract and continue with getting the work done, as it is in everyone's best interest.”  (Plaintiff's Exhibit 25.)

In a letter dated July 31, 2008, Mrs. Matulis informed Robert McCabe that the tenants planned to vacate the farmhouse on August 15, 2008.  (Plaintiff's Exhibit 26.)   She also offered to liquidate the Fidelity account, retaining $20,000 for future expenses.  Id. Robert McCabe did not respond to this letter.

On August 29, 2008, Mrs. Matulis was deposed by Attorney Richard Kosinski, in connection with the probate proceeding.  (Plaintiff's Exhibit 29.)   In compliance with a subpoena duces tecum, she brought with her many documents related to the management of the property.

At this point in time Mrs. Matulis felt that in order to protect her personal interests she needed legal representation.   Accordingly, she retained an attorney and charged the common fund for his fee.   Mrs. Matulis believed that this charge was appropriate because it was related to her property management duties.   The legal fee was $3,650.   At a later date, Mrs. Matulis repaid the common fund $3,500.   This leaves a balance owed to the common fund in the amount of $150.

Mrs. Matulis filed two motions with the probate court, both dated August 26, 2008.  (Plaintiff's Exhibits 32 and 33.)   The first motion was for permission to make repairs, and the second motion for permission to seek tenants.  Id. Mrs. Matulis took this action because it was her belief that she was not getting the cooperation of the estate in resolving a number of property management issues.   Specifically, Attorney Kosinski advised Mrs. Matulis that the estate did not want the property rented and there was a dispute over proposed repairs.   Thus, she sought the orders of the probate court.

In a letter dated November 4, 2008, addressed to the probate court, Judge Walter A. Clebowicz, counsel acting on behalf of Mrs. Matulis advocated that the probate court had jurisdiction to address the motion to seek tenants.   (Defendant's Exhibit HHHH.) Attorney Kosinski took the opposite position.   (Plaintiff's Exhibit 38.)

On November 5, 2008, a hearing was held in probate court on the two motions.   At the hearing, Judge Clebowicz indicated that he did not want the property rented.   He suggested a process be put into place where the dispute could be resolved and the property sold.   Mrs. Matulis felt that it was not in her best interests to not follow Judge Clebowicz's suggestion.   Mrs. Matulis took this course of action, because she was discouraged by the recent events and wanted the matter resolved.   She instead filed the present action in the superior court.

The probate court memorialized its orders on the two motions in a document dated April 8, 2009.  (Defendant's Exhibits EE.) The court denied the motion to seek tenants and granted the motion to make repairs as to insulation only.⁴  Id. Notwithstanding the probate court's order, Mrs. Matulis attempted to rent the property.⁵  Robert McCabe, acting as the executor of the estate, took no other steps to prohibit the renting of the property.  Id.

During the years of 2009 through 2011, the property continued to incur expenses such as heating oil, electric service repair, and maintenance costs.   (Plaintiff's Exhibit 39.)   The expenses totaled $7,128.09, and were paid out of the common fund.

After the tenants vacated the property on or about August 15, 2008, Mrs. Matulis continued to manage the property through September 21, 2012, when the common fund was deposited with the clerk of the superior court.   She performed a variety of necessary tasks and kept a detailed log of her work.  (Plaintiff's Exhibit 27.)   The time spent on this work by Mrs. Matulis totals two hundred forty-six and one-half hours.  Id. Mrs. Matulis seeks to be compensated at $50 per hour as a management fee, for one-half of $12,325, which would be $6,162.50.

During the years of 1999–2011, Mrs. Matulis and her husband paid federal and state income tax on the interest and dividends earned on the common fund accounts.   Frank Marrocco, CPA has examined the tax returns and had determined that the total additional taxes amounted to $2,774.  (Plaintiff's Exhibit 12.)   Mrs. Matulis seeks to be compensated for one-half of this amount, or $1,387.

During the period of time that Mrs. Matulis managed the common fund, there were six bank overdraft fees assessed on TD Banknorth checking account No. 3090.  (Defendant's Exhibit YY.) In order to address this situation, Mrs. Matulis reimbursed the common fund from her personal account.   However, in so doing, Mrs. Matulis overpaid the common fund $1,685.91.  (Plaintiff's Exhibit 44.)

Robert McCabe performed some maintenance work on the property.   He cut down and removed a pine tree near the back door of the house and did miscellaneous pruning of other vegetation Mr. McCabe also removed four bags of asbestos to a hazardous waste site.   He placed a value of this work at $1,500.   Additionally, Mr. McCabe hired two individuals to drain water out of the heating system and replace it with glycol.   He paid the workers $200 each and purchased the glycol at a cost of $50.   This represented a total out-of-pocket expense of $450.

In her management of the common fund, Mrs. Matulis did not misappropriate any of the monies.   All of the monies expended were for necessary repair and maintenance as well as management fees.   None of the funds which compromise the common fund have been distributed to the estate of Valerie McCabe.

In a motion dated December 3, 2008, Robert McCabe sought the following relief from the Probate Court:  “The Executor moves that the Court order Elaine Erwin Matulis to forthwith distribute to the Estate all of the monies in her possession or control in which the Estate has an interest.”  (Defendant's Exhibit U.)

On January 5, 2012, Mrs. Matulis moved the superior court for permission to turn over the common fund monies to the clerk of the court.   No. 205.   Thereafter, on July 30, 2012, the Court, Sheridan, J., in granting the motion ordered “[t]he net revenue that the plaintiff is holding will be deposited with the court.   If not already provided, the plaintiff will provide to the court and the defendant a full accounting for the amount deposited ($27,791.62) including the gross amounts received, the source of the receipts, and specific information as to any amounts deducted therefrom.”   No. 205.01.   The order was complied with on two occasions.   In a pleading dated September 21, 2012, Ms. Matulis notified the court that $28,910.80 had been deposited with the clerk.   No. 232.   Thereafter in a pleading dated October 9, 2012, Ms. Matulis provided the court with an accounting of the funds.   No. 233.   In response in a pleading dated January 28, 2013, Mr. McCabe filed a motion for sanctions claiming the accounting of common funds was inadequate.   No. 242.   The Court, Sheridan, J., in an ordered dated February 15, 2013, ruled on the motion for sanctions in the following manner:  “On that basis, the court concludes that the information supplied in the October 9, 2012 compliance satisfies the court's July 30, 2012 order that the defendant provide a ‘full accounting for the amount deposited ․ including the gross amounts received, the source of the receipts, and specific information as to any amounts deducted therefrom.’   The Motion for Sanctions is denied.”   No. 242.01.

The court currently holds $214,969.12 which consists of $28,910.80 from the liquidation of the common fund and $186,058.32 which consists of the net proceeds from the sale of the property The parties agree that had they not had claims against each other as set forth in this case, each would be entitled to a one-half interest in the $214,969.12.

C. Analysis of Plaintiff's Claims

1. Count 2:  Declaratory Judgment

“The Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed.   The declaration shall have the force of a final judgment.”  General Statutes § 52–29(a).  “Practice Book § 17–54 provides that the court may award declaratory relief ‘as to the existence or nonexistence (1) of any right, power, privilege or immunity;  or (2) of any fact upon which the existence or nonexistence of such right, power, privilege or immunity does or may depend, whether such right, power, privilege or immunity now exists or will arise in the future.’  Practice Book § 17–55 permits a court to award such relief if the following conditions are met:  ‘(1) The party seeking the declaratory judgment has an interest, legal or equitable, by reason of danger of loss or of uncertainty as to the party's rights or other jural relations;  (2) There is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement between the parties;  and (3) In the event that there is another form of proceeding that can provide the party seeking the declaratory judgment immediate redress, the court is of the opinion that such party should be allowed to proceed with the claim for declaratory judgment despite the existence of such alternate procedure.’  “ Maloney v. PCRE, LLC, 68 Conn.App. 727, 750–51, 793 A.2d 1118 (2002).   The court has “wide discretion to render a declaratory judgment unless another form of action clearly affords a speedy remedy as effective, convenient, appropriate and complete.”  (Internal quotation marks omitted.)  Pamela B. v. Ment, 244 Conn. 296, 308, 709 A.2d 1089 (1998), overruled on other grounds by Gold v. Rowland, 296 Conn. 186, 994 A.2d 106 (2010).

In the second count, the plaintiff alleges that she managed the property on behalf of the co-owners, performing a variety of duties as manager, and the parties are unable to agree on appropriate compensation.   The plaintiff seeks judgment regarding the rights and responsibilities of the parties.   Specifically, the plaintiff seeks judgment as to her entitlement to compensation for her management of the property, to reimbursement for taxes she paid on the income generated by the property, and to reimbursement for her overpayment to the common fund account.

In 1998, Mrs. Matulis and Robert McCabe agreed that she would manage the property and receive a fee for her services.   In the early years of this arrangement, Mrs. Matulis paid herself one month's rent and later a ten percent management fee.   Jessie Erwin and her estate expressed no opposition to this mutually beneficial arrangement.   On or about August 15, 2008, the last of the tenants vacated the property.   Mrs. Matulis continued to manage the property until September 21, 2012.   During this period of time she performed two hundred fortysix and one half hours of beneficial work managing the property.   An hourly fee of $50 is reasonable under all circumstances presented.   The court finds that Mrs. Matulis is entitled to receive credit for one-half of the total amount of $12, 325, or $6,237.50.

During the period of 1999–2011, Mrs. Matulis paid all applicable taxes on interest and dividends earned on the common fund.   The total amount of taxes paid is $2,774.   Mrs. Matulis is entitled to a return of one half of this amount, or $1,387.

Mrs. Matulis reimbursed the common fund for bank overdraft fees from her personal funds.   In making this payment, she overpaid the common fund $1,685.91.   She is entitled to a credit in this amount.

Mrs. Matulis also reimbursed the common fund for legal fees incurred in connection with the probate proceedings.   In doing so, she underpaid the common fund $150.   Her proportionate share of the proceeds must be reduced by this amount.

2. Count 3:  Tortious Interference

“It is well established that the elements of a claim for tortious interference with business expectancies are:  (1) a business relationship between the plaintiff and another party;  (2) the defendant's intentional interference with the business relationship while knowing of the relationship;  and (3) as a result of the interference, the plaintiff suffers actual loss.”  (Internal quotation marks omitted.)  American Diamond Exchange, Inc. v. Alpert, 302 Conn. 494, 510, 28 A.3d 976 (2011) “[I]t is an essential element of the tort of unlawful interference with business relations that the plaintiff suffered actual loss.”  (Internal quotation marks omitted) Hi–Ho Tower, Inc. v. Com–Tronics, Inc., 255 Conn. 20, 27, 761 A.2d 1268 (2000).  “In an action for intentional interference with business relations ․ the better reasoned approach requires the plaintiff to plead and prove at least some improper motive or improper means.”  Blake v. Levy, 191 Conn. 257, 262, 464 A.2d 52 (1983).

“It is axiomatic that the burden of proving damages is on the party claiming them ․ When damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty ․ Damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty” (internal quotation marks omitted.)  Lawson v. Whitey's Frame Shop, 241 Conn. 678, 689, 697 A.2d 1137 (1997).  “Evidence is considered speculative when there is no documentation or detail in support of it and when the party relies on subjective opinion.”  Viejas Band of Kumeyaay Indians v. Lorinsky, 116 Conn.App. 144, 163, 976 A.2d 723 (2009).

In the present case, Mrs. Matulis has asserted that Robert McCabe, acting as executor, directly and through his counsel, prohibited her from renting the property and thereby tortiously interfered with her financial expectancy of rental income.   The plaintiff claims the total loss of rental income was $50,000, and she is entitled to half this amount, or $25,000.   The plaintiff is also seeking payment from the defendant for expenses incurred as a result of the property not being rented, at a total of $3,811.10.   During the years of 2009 through 2011, the property continued to incur expenses such as heating oil, electric service, repair, and maintenance costs.  (Plaintiff's Exhibit 39.)   The expenses totaled $7,128.09, which were paid out of the common fund.

The court finds that the plaintiff has not sustained her burden of proof on these claims.   Robert McCabe, acting through his attorney, advised Mrs. Matulis that the estate did not want the property rented.   Mrs. Matulis, in a motion to the probate court, sought an order permitting her to seek tenants.   The probate court, at a hearing on November 5, 2008, indicated that it did not want the property rented, but rather indicated that it should be sold.   In a written order dated April 8, 2009, the court formally denied the motion to seek tenants.   Notwithstanding the probate court's order, Mrs. Matulis continued to make attempts to rent the property.

In January 2009, Mrs. Matulis was marketing the property for rent, and placed a For Rent sign on the front lawn of the house.   John McCabe was aware of the presence of the sign, and did not express any objection or take any steps to have it removed.

The evidence presented at trial, including pictures of a For Rent sign on the front lawn of the property, demonstrate that the plaintiff in fact attempted to rent the property.   The fact that the plaintiff was not successful in renting the property does not amount to a tortious interference by the defendant in her financial expectancy.   The court finds that the plaintiff has not sustained her burden of proof on this claim.   Accordingly, the plaintiff's request for lost rental income is denied.

Additionally, the plaintiff has not proven entitlement to a one-half share of the incurred expenses during the period in question.   The expenses were necessarily incurred to maintain the property while it was not rented, notwithstanding her efforts to lease the property.   Accordingly the plaintiff's request for these expenses is also denied.

D. Analysis of Defendant's Claims

1. Special Defenses

The defendant has raised a number of special defenses.

As to Count Two—Declaratory Judgment

a) The second count should fail in that there is another form of proceeding that can provide immediate redress.

The court finds that the defendant has not sustained his burden of proof on this special defense.   An action for declaratory judgment is an appropriate way in which to adjudicate the rights and responsibilities of the parties.

As to Count Three—Tortious Interference:

a) The defendant's consent as a co-owner was not necessary for plaintiff to rent the property.

b) Unclean Hands.

The court has found that Mrs. Matulis has failed to sustain her burden of proof on her claim of tortious interference.   Accordingly, the court need not address these special defenses.

2. Counterclaims

a. Conversion

“Conversion is an unauthorized assumption and exercise of the right of ownership over property belonging to another, to the exclusion of the owner's rights.”  Mystic Color Lab, Inc. v. Auctions Worldwide, LLC, 284 Conn. 408, 418, 934 A.2d 227 (2007).  “To establish a valid claim of conversion a plaintiff must establish legal ownership or right to possession in the particular thing ․ that the defendant is alleged to have converted.”   (Internal quotation marks omitted.)  Marut v. IndyMac Bank, FSB, 132 Conn.App. 763, 769, 34 A.3d 439 (2012).  “[M]oney can be the subject of statutory theft ․ The plaintiffs must establish, however, legal ownership or right to possession of specifically identifiable moneys.”  (Citations omitted, internal quotation marks omitted.)  Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 771–72, 905 A.2d 623 (2006).

The court finds that the defendant has not sustained his burden of proof on this counterclaim.   Mrs. Matulis maintained the rental monies in four accounts in her name.   These common fund accounts earned income.   Mrs. Matulis did not misappropriate the common fund.   All of the monies paid out of the fund were for the repair and maintenance of the property as well as management fees.

b. Violation of a Constructive Trust by Failing and Refusing to Comply With a Demand to Tender Common Funds

“The requisite elements of a valid and enforceable trust are:  (1) a trustee, who holds the trust property and is subject to duties to deal with it for the benefit of one or more others;  (2) one or more beneficiaries, to whom and for whose benefit the trustee owes the duties with respect to the trust property;  and (3) trust property, which is held by the trustee for the beneficiaries.”   (Internal quotation marks omitted.)  Palozie v. Palozie, 283 Conn. 538, 545, 927 A.2d 903 (2007).  “A constructive trust arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy ․” Trevorrow v. Marcuccio, 125 Conn.App. 141, 146–47, 10 A.3d 1058 (2010).  “[A] constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.”   (Internal quotation marks omitted.)  Town of New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 466, 970 A.2d 592 (2009).  “[T]he existence of a trust relationship is accompanied as a matter of course by the right of the beneficiary to demand of the fiduciary a full and complete accounting at any proper time ․ The scope of such accounting depends of course upon the circumstances of the individual case, and, as a general rule, should include all items of information in which the beneficiary has a legitimate concern.”  (Citations omitted;  internal quotation marks omitted.)   Zuch v. Connecticut Bank & Trust Co., 5 Conn.App. 457, 462–63, 500 A.2d 565 (1985).

The court finds that the defendant has failed to sustain his burden of proof on this counterclaim.   Mrs. Matulis maintained and accounted for the funds contained within the common fund.   On numerous occasions she offered to disburse monies from the fund.   Mrs. Matulis did not commit fraud, duress or abuse a confidence in her management of the common fund.

c. Breach of Fiduciary Duty by Failing to Disburse Common Fund Account Monies Upon Demand

The court finds that the defendant has failed to sustain his burden of proof on this counterclaim The court incorporates all of the previous remarks concerning violation of a constructive trust.

d. Breach of a Duty of Good Faith and Fair Dealing

“To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith ․ Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive ․ Bad faith means more than mere negligence;  it involves a dishonest purpose.”  (Citations omitted;  emphasis added;  internal quotation marks omitted.)  TD Bank, N.A. v. J and M Holdings, LLC, 143 Conn.App. 340, 348, 70 A.3d 156 (2013).

The court finds that the defendant has not sustained his burden of proof on this counterclaim.   Mrs. Matulis managed the property by collecting rents, securing tenants, performing maintenance and paying bills.   She arranged for the completion of necessary repairs which were mutually beneficial to the parties.   Mrs. Matulis accounted for the common funds collected and expended.   At various times she offered to distribute common fund monies.   She did not expend common fund monies for improvements with the intention to ultimately purchase the property at a below market price.   Mrs. Matulis did not act in bad faith in her management of the property.

e. Tortious Interference With a Financial Expectancy

The court incorporates the statement of law as set forth in the ruling on Count Three of the plaintiff's complaint.

The defendant has failed to sustain his burden of proof on this claim.   The court incorporates all of its previous remarks concerning all other counterclaims.

f. Negligence

“[N]egligence is the breach of a legal duty owed by one person to another, and such legal duty is the exercise of reasonable care.”  (Internal quotation marks omitted.)  Phaneuf v. Berselli, 119 Conn.App. 330, 336, 988 A.2d 34 (2010).  “The essential elements of a cause of action in negligence are well established:  duty;  breach of that duty;  causation;  and actual injury.”   (Internal quotation marks omitted.)  Mazurek v. Great American Ins. Co., 284 Conn. 16, 29, 930 A.2d 682 (2007).

The defendant has failed to sustain his burden of proof on this claim.   The court incorporates all of its previous remarks concerning all other counterclaims.

g. Intentional misrepresentation.

“We deal first with the defendant's claim of error regarding the court's conclusion of fraudulent misrepresentation.   The essential elements of an action in fraud, as we have repeatedly held, are:  (1) that a false representation was made as a statement of fact;  (2) that it was untrue and known to be untrue by the party making it;  (3) that it was made to induce the other party to act on it;  and (4) that the latter did so act on it to his injury.”  Miller v. Appleby, 183 Conn. 51, 54–55, 438 A.2d 811 (1981).  “The intentional withholding of information for the purpose of inducing action has been regarded ․ as equivalent to a fraudulent misrepresentation.”  Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 407, 456 A.2d 325 (1983).

The defendant has failed to sustain his burden of proof on this claim.   The court incorporates all of its previous remarks concerning all other counterclaims.

h. Failure to Account for Rents and Other Income

The defendant has failed to sustain his burden of proof on this claim.

During the period of time that Mrs. Matulis managed the common fund she maintained a detailed written record of her work.   Mrs. Matulis placed the rental monies in four separate accounts.   She retained the services of a certified public accountant who prepared tax documents.   Included within in this work was the preparation of a scheduled E form which itemized all rental income and expenses.   On a yearly basis Mrs. Matulis provided Mr. McCabe with the completed IRS Schedule E forms along with written explanations of the status of the property.   Finally, in response to numerous requests for documents, Mrs. Matulis made good faith efforts to comply.

3. Setoff

Pursuant to General Statutes § 52–139(a), “[i]n any action brought for the recovery of a debt, if there are mutual debts between the plaintiff or plaintiffs, or any of them, and the defendant or defendants, or any of them, one debt may be set off against the other.”  “Traditionally, the distinction between a setoff and a counterclaim centers around whether the claim arises from the same transaction described in the complaint.   If the claim involves a debt which is mutual and liquidated, even though it arises from separate transactions, it is characterized as a setoff ․ If the claim arises out of the same transaction described in the complaint, it is characterized as a counterclaim ․ The title of the pleading is not controlling.   The issue is, rather, whether sufficient facts are pleaded that would allow recovery either as a setoff or as a counterclaim.”  (Citations omitted, internal quotation marks omitted.)  Northwestern Electric, Inc. v. Rozbicki, 6 Conn.App. 417, 426, 505 A.2d 750 (1986).  “[A] set-off may be heard as part of a hearing in damages in order to reduce or defeat the plaintiff's damages.”  Hope's Architectural Products, Inc. v. Fox Steel Co., 44 Conn.App. 759, 762, 692 A.2d 829, cert. denied, 241 Conn. 915, 696 A.2d 985 (1997).

Mr. McCabe has sustained his burden of proof on the claim of setoff.   He performed maintenance work on the property.   This work included the removal of a tree and miscellaneous pruning of other vegetation.   He also removed hazardous waste from the site.   The value of this work is $1,500.

Mr. McCabe hired two individuals to winterize the heating system with glycol.   This represented a total out-of-pocket expense of $450.   The defendant is entitled to a setoff of one-half of the total value of the work $1,950 or $975.

III

CONCLUSION

The court currently holds total proceeds in the amount of $214,969.12.   The parties agree that absent the claims made each would be entitled to one-half or $107,484.56.   Additionally, the plaintiff is entitled to management fees in the amount of $6,162.50;  reimbursement of income taxes $1,387;  and reimbursement of overpayment to the common fund for overdraft fees in the amount of $1,685.91;  less legal fees from probate court proceedings in the amount of $150.   This represents a total of $9,085.41.   The defendant is entitled to a setoff of $975.

The court enters declaratory judgment as follows:

Plaintiff's share of proceeds—$115,594.97

Defendant's share of proceeds—$99,374.15

Plus taxable costs.

SO ORDERED.

BY THE COURT

PETER EMMETT WIESE, JUDGE

FOOTNOTES

FN1. The plaintiff moved for summary judgment on the first count.   The court, Shortall, J., granted the motion by order dated September 7, 2011.   In so doing, the court ordered a sale by a committee.   In the order the court stated in part:  “[b]ased on the evidence adduced at the hearing on August 15, 2011, the court finds that there was no agreement between the parties that the property in question be sold in the open market.”   On November 5, 2011, an auction was conducted by the committee.   The successful bidder at $190,000 was John McCabe.   Elaine Matulis was the second highest bidder at $188,000.   After the payment of fees and costs a total of $186,058.32 was realized from the sale.   These funds have been deposited with the clerk of the court..  FN1. The plaintiff moved for summary judgment on the first count.   The court, Shortall, J., granted the motion by order dated September 7, 2011.   In so doing, the court ordered a sale by a committee.   In the order the court stated in part:  “[b]ased on the evidence adduced at the hearing on August 15, 2011, the court finds that there was no agreement between the parties that the property in question be sold in the open market.”   On November 5, 2011, an auction was conducted by the committee.   The successful bidder at $190,000 was John McCabe.   Elaine Matulis was the second highest bidder at $188,000.   After the payment of fees and costs a total of $186,058.32 was realized from the sale.   These funds have been deposited with the clerk of the court.

FN2. The defendant has raised the following special defenses:  1) declaratory judgment is not appropriate;  2) as a matter of law the defendant's consent as co-owner of the premises was not necessary to rent the premises;  3) unclean hands.   He has also asserted the following counterclaims:  1) conversion;  2) violated a constructive trust by failing and refusing to comply with a demand to tender common funds;  3) breach of a fiduciary duty;  4) breach of a confidential relationship;  5) breach of a duty of good faith and fair dealing;  6) failure to marshal assets of the decedent's estate thereby obstructing its administration;  7) tortious interference;  8) negligence;  9) intentional misrepresentation;  10) failure to account for rents and income.   The defendant has also claimed a setoff for monies expended and the reasonable value of work performed on the property..  FN2. The defendant has raised the following special defenses:  1) declaratory judgment is not appropriate;  2) as a matter of law the defendant's consent as co-owner of the premises was not necessary to rent the premises;  3) unclean hands.   He has also asserted the following counterclaims:  1) conversion;  2) violated a constructive trust by failing and refusing to comply with a demand to tender common funds;  3) breach of a fiduciary duty;  4) breach of a confidential relationship;  5) breach of a duty of good faith and fair dealing;  6) failure to marshal assets of the decedent's estate thereby obstructing its administration;  7) tortious interference;  8) negligence;  9) intentional misrepresentation;  10) failure to account for rents and income.   The defendant has also claimed a setoff for monies expended and the reasonable value of work performed on the property.

FN3. Counterclaim counts three and eleven were disposed of through summary judgment.   See orders no. 176.10, 234.20.   Counterclaim count eight was disposed of through a motion to strike no. 168.01.   The case record will be cited as No. (docket number of filing)..  FN3. Counterclaim counts three and eleven were disposed of through summary judgment.   See orders no. 176.10, 234.20.   Counterclaim count eight was disposed of through a motion to strike no. 168.01.   The case record will be cited as No. (docket number of filing).

FN4. On November 5, 2008, prior to the probate court hearing the parties and their attorneys met to discuss the items listed on the August 26, 2008 motion for permission to make repairs.  (Plaintiff's Exhibit 35.)   The parties agreed that all of the items could be addressed with the exception of the attic insulation and floor refinishing.  Id..  FN4. On November 5, 2008, prior to the probate court hearing the parties and their attorneys met to discuss the items listed on the August 26, 2008 motion for permission to make repairs.  (Plaintiff's Exhibit 35.)   The parties agreed that all of the items could be addressed with the exception of the attic insulation and floor refinishing.  Id.

FN5. Photographs of the farmhouse taken on January 8, 2009 by John McCabe show a For Rent sign on the front lawn.  (Defendant's Exhibit W.) At the time these pictures were taken Mrs. Matulis was actively attempting to rent the property without success.   John McCabe did not express any objection to the presence of the sign..  FN5. Photographs of the farmhouse taken on January 8, 2009 by John McCabe show a For Rent sign on the front lawn.  (Defendant's Exhibit W.) At the time these pictures were taken Mrs. Matulis was actively attempting to rent the property without success.   John McCabe did not express any objection to the presence of the sign.

Wiese, Peter E., J.