Sunrise Common Condominium Association, Inc. v. Andrew Bello et al. (2014)

MEMORANDUM OF DECISION

The defendant, the Bank of New York Mellon, moves for summary judgment on a complaint to foreclose a statutory lien brought by the plaintiff, Sunrise Common Condominium Association, Inc., a condominium owners' association.   The defendant claims that it is entitled to a judgment as a matter of law because the plaintiff's lien does not have statutory superpriority over the defendant's first mortgage, and, therefore, the defendant is not a junior lienholder and is an improper party to the foreclosure action.   More particularly, the defendant contends that because the plaintiff's lien is for expenses other than monthly common charges, it is not a superpriority lien for “common expenses” within the meaning of General Statutes § 47–258(b), but a recording lien junior to the defendant's first security interest.

The plaintiff seeks to foreclose its lien in accordance with the provisions of § 47–258.   In its complaint, the plaintiff alleges that it has a superpriority lien “for the nonpayment of charges resulting from misconduct related to water damage” that was sustained in a unit that is part of the condominium association.   The plaintiff claims that the defendants, Andrew and Madeline Bello, owners of the unit, owe the charges and have failed to pay them.   The plaintiff asserts a lien, prior in right to the defendant's first mortgage, “in the amount equal to the sum of ․ the unpaid balance of the charges due and payable at the time the judgment is rendered ․ or the equivalent of six months common charges, whichever is less;  plus ․ attorneys fees and costs.”   The plaintiff alleges that the defendant's mortgage is junior to the plaintiff's “statutory priority lien and prior in right to remaining balance of its lien.”   In moving for summary judgment, the defendant contends that the plaintiff's lien for expenses related to water damages to a condominium unit is not entitled to superpriority over its mortgage and, as a result, summary judgment should be granted in its favor.

Condominium association liens are legislatively created by statute.   “Connecticut General Statutes § 47–258 modifies both the priority in procedural requirements for liens against units, and also expands the charges that can be liened.   The lien has priority over all encumbrances except (1) liens and encumbrances recorded before the declaration;  (2) a first or second security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent;  and (3) liens for real property and other governmental assessments or charges against the unit.”   D. Caron & G. Milne, Connecticut Foreclosures (5th Ed.2011) § 13–1:1, p. 638.

Association liens are granted a limited priority under § 47–258.   Subsection (b) of that statute provides:  “[A] Notwithstanding any provision in the declaration or bylaws to the contrary, a lien under this section is prior to all other liens and encumbrances on a unit except (1) liens and encumbrances recorded before the recordation of the declaration and, in a cooperative, liens and encumbrances which the association creates, assumes or takes subject to, (2) a first or second security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent, or, in a cooperative, a first or second security interest encumbering only the unit owner's interest and perfected before the date on which the assessment sought to be enforced became delinquent, and (3) liens for real property taxes and other governmental assessments or charges against the unit or cooperative.   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 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 attorney's fees in enforcing its lien.   A lien for any assessment or fine specified in subsection (a) ¹ 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.)  General Statutes § 47–258(b), as amended by Public Act 13–156.

The defendant moves for summary judgment contending that, under § 47–258(b), the plaintiff's lien for water-related damages is not entitled to superpriority over its first mortgage.   Rather, the plaintiff merely has a recording lien that is junior to the defendant's first mortgage.   In its memorandum in opposition to summary judgment, the plaintiff maintains that summary judgment is inappropriate because the amount of its lien is determined by the court at the time of judgment;  our rules of practice and statutes require that the plaintiff name the defendant, an alleged junior encumbrancer, as a defendant;  and the defendant's claim should be asserted by a motion to determine priorities.   At the hearing on the motion, the plaintiff further claimed that the phrase “to the extent of an amount equal to the common assessments” in § 47–258(b) provides a “measure” of the maximum amount of a superpriority lien;  that is, the plaintiff has a superpriority lien for water damages related expenses in an amount no greater than the sum of nine months of common charges.   Whether the plaintiff's lien pursuant to § 47–258(b) is entitled to superpriority over the defendant's first mortgage where it is undisputed that the plaintiff is not seeking to recover monthly common charges, but expenses incurred by the plaintiff as a result of water damages to a unit in the association, is a matter of statutory interpretation.

The “plain meaning rule” codified in General Statutes § 1–2z provides the framework for statutory interpretation.  “The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes.   If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.”  General Statutes § 1–2z.

“The process of statutory interpretation involves the determination of the meaning of the statutory language as applied to the facts of the case, including the question of whether the language does so apply ․ In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes.   If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.”  Doctor's Associates, Inc. v. Windham, 146 Conn.App. 768, 783–84, 81 A.3d 230 (2013).  “In construing a statute, common sense must be used, and courts must assume that a reasonable and rational result was intended.”   Norwich Land Co. v. Public Utilities Commission, 170 Conn. 1, 4, 363 A.2d 1386 (1975).

“Section 47–258, which is a part of the [Common Interest Ownership Act], establishes a lien with a split priority.   Additionally, it authorizes and describes appropriate foreclosure mechanisms.   In derogation of the common-law rule that first in time is first in right, § 47–258(b) establishes a priority for common charges and a superpriority for ‘the common expense assessments ․ which would have become due in the absence of acceleration during the [nine] months immediately preceding institution of an action to enforce ․ the association's lien ․’ Hudson House Condominium Ass'n, Inc. v. Brooks, 223 Conn. 610, 614, 611 A.2d 862 (1992), quoting General Statutes § 47–258(b).  The split priority establishes a superpriority for up to [nine] months of common charges and attorneys fees and costs prior to first and second mortgages and taxes, and establishes a recording lien for the remainder of the common charges that is prior to many other liens.   Thus, the statute provides an owners' association with a speedy mechanism by which it can secure up to [nine] months of unpaid common charges, as well as attorneys fees and costs incurred in such a pursuit.   The creation of a lien with such a superpriority protects consumers, because unit owners depend on their association for vital maintenance services.”  Linden Condominium Association, Inc. v. McKenna, 247 Conn. 575, 584–85, 726 A.2d 502 (1999).

The statute provides that the plaintiff's lien is prior to a recorded first or second security interest “to the extent of ․ an amount equal to the common expense assessments based on the periodic budget adopted by the association ․ which would have become due in the absence of acceleration during the nine months immediately preceding institution of an action to enforce ․ the association's lien ․” General Statutes § 47–258(b).  By its plain language, § 47–258(b) provides a condominium association with a superpriority lien for a nine-month period of common expense assessments adopted by a condominium association in their budget process,² and a separate priority lien for the balance of the common charges.   The statute is clear that common expenses are the association's budgeted expenses, commonly referred to as monthly common charges.   The common expenses entitled to superpriority are not expenses related to water damage to a unit, which expenses are occurrence related and not budget expenses.   See also People's United Bank v. Rieger, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV–09–5023963 (October 14, 2009, Doherty, J.) [48 Conn. L. Rptr. 660] (“[I]t is apparent that our Supreme Court has determined that the superpriority established by § 47–258(b) is limited to precisely what the statute provides, the common charges that would have become due in the absence of acceleration during the six months before the foreclosure.   Since a party does not usually incur late fees and late interest in the absence of default, these charges are outside the ambit of the superpriority lien of § 47–258(b)”).

As noted by Judge Doherty, our Supreme Court adopted such an interpretation in commenting that “the statute provides an owners' association with a speedy mechanism by which it can secure up to [nine] months of unpaid common charges ․” Linden Condominium Association v. McKenna, supra, 247 Conn. 585, and noted that the statute is a consumer protection statute to the extent the condominium association is responsible for the care and maintenance of the common areas.

In considering the language of § 47–258(b), and its relationship to other statutes, particularly but not limited to § 47–257 and § 47–258(a), the statute creates a split, or dual, lien.   The statute plainly provides a condominium association with a superpriority lien for nine months of unpaid common expense assessments, commonly referred to as common charges.   The plaintiff has a non-superpriority lien for the remainder of the charges.   Such an interpretation does not result in the application of the statute being absurd or unworkable, and is consistent with our Supreme Court's noted purpose of the statute to protect the unit owners dependence on the condominium association to care for and maintain the common areas.   Also, it allows for the harmonious interpretation of statutes.

In view of the foregoing, the court concludes that the plaintiff's lien is not entitled to superpriority over the defendant's first mortgage.   It is undisputed that the plaintiff's lien is for water-related damages to a unit within the association, and not for monthly common charges.   Therefore, the defendant is entitled to a judgment as a matter of law, and the court grants the defendant's motion for summary judgment (118.00).

TYMA, J.

FOOTNOTES

FN1. Subsection (a) of General Statutes § 47–258 specifies the charges for which the association has a lien.   It provides that “[t]he association has a statutory lien on a unit for any assessment attributable to that unit or fines imposed against its unit owner.   Unless the declaration otherwise provides, reasonable attorneys fees and costs, other fees, charges, late charges, fines and interest charged pursuant to subdivisions (10), (11) and (12) of subsection (a) of section 47–244 and any other sums due to the association under the declaration, this chapter, or as a result of an administrative, arbitration, mediation or judicial decision, are enforceable in the same manner as unpaid assessments under this section.   If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment thereof becomes due.”  General Statutes § 47–258(a)..  FN1. Subsection (a) of General Statutes § 47–258 specifies the charges for which the association has a lien.   It provides that “[t]he association has a statutory lien on a unit for any assessment attributable to that unit or fines imposed against its unit owner.   Unless the declaration otherwise provides, reasonable attorneys fees and costs, other fees, charges, late charges, fines and interest charged pursuant to subdivisions (10), (11) and (12) of subsection (a) of section 47–244 and any other sums due to the association under the declaration, this chapter, or as a result of an administrative, arbitration, mediation or judicial decision, are enforceable in the same manner as unpaid assessments under this section.   If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment thereof becomes due.”  General Statutes § 47–258(a).

FN2. General Statutes §§ 14–257(a) and (b) also use the phrase “common expense assessment” and provide:  (a) Until the association makes a common expense assessment, the declarant shall pay all common expenses.   After an assessment has been made by the association, assessments shall be made at least annually, based on a budget adopted at least annually by the association.(b) Except for assessments under subsections (c), (d) and (e) of this section, or as otherwise provided in this chapter, all common expenses shall be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsections (a) and (b) of section 47–226.   The association may charge interest on any past due assessment or portion thereof at the rate established by the association, not exceeding eighteen per cent per year..  FN2. General Statutes §§ 14–257(a) and (b) also use the phrase “common expense assessment” and provide:  (a) Until the association makes a common expense assessment, the declarant shall pay all common expenses.   After an assessment has been made by the association, assessments shall be made at least annually, based on a budget adopted at least annually by the association.(b) Except for assessments under subsections (c), (d) and (e) of this section, or as otherwise provided in this chapter, all common expenses shall be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsections (a) and (b) of section 47–226.   The association may charge interest on any past due assessment or portion thereof at the rate established by the association, not exceeding eighteen per cent per year.

Tyma, Theodore R., J.