Connecticut Supreme Court issues new ruling on condominium governance under CIOA
In the complex world of property ownership and community governance, conflicts often emerge concerning the responsibilities of condominium associations versus individual unit owners.
In Canner v. Governors Ridge Ass'n, 348 Conn. 726 (Conn. April 2, 2024), the Connecticut Supreme Court offered important insight regarding the intricate web of obligations outlined in Connecticut’s Common Interest Ownership Act (CIOA), as well as the relevant statute of limitations analysis governing such claims. The plaintiffs raised concerns over the allegedly defective foundations of their units within a common interest community. Central to the plaintiffs' argument were assertions of negligence in design and construction, coupled with the association's purported failure to uphold its duties under CIOA.
Conversely, the defendant condominium association invoked a statute of limitations defense, contending that the plaintiffs' claims were time barred. This case not only underscores the often complex interplay between contractual and tortious obligations, but also highlights the role of statutory interpretation in resolving disputes within common interest communities and clarifies the statute of limitations applicable to such claims.
Executors of two estates brought an action against Governors Ridge Association on behalf of their respective estates to recover damages allegedly caused by the units’ faulty foundations. The units were purchased in 2001 and 2002. The evidence showed that Governors Ridge acknowledged the problem and, from 2012-2016, obtained several estimates to repair the foundations; however, no repairs were completed. The plaintiffs originally sued in 2016 and 2017 alleging negligent design and construction of the foundation, as well as claiming that the defendant violated its duties under CIOA § 47-249(a) by neglecting to complete repairs to the community’s common elements.
Defendant answered with a special defense and argued the plaintiffs' claims were time barred pursuant to General Statutes §52-577, which prescribes a three-year statute of limitations generally applicable to tort actions. In 2018, plaintiffs filed an amended complaint, which incorporated allegations that the defendant breached its declaration and bylaws by failing to maintain, repair, or replace the defective foundations.
The trial court agreed with the defense and ruled that the plaintiffs' claims were time barred, which the appellate court affirmed, as the claims sounded in tort, rather than in contract. It also emphasized that the claims accrued when the units were purchased, as the claims related to the units’ initial construction. It also agreed with the trial court's assessment that the declaration and bylaws did not impose a duty to repair because the relevant documents only applied to common elements and not the foundations of individual units.
Pursuant to CIOA, §47-249(a), condominium associations are "responsible for maintenance, repair and replacement of the common elements of a common interest community, except to the extent provided by the community's declaration or provided by, among other statutory provisions, General Statutes §47-255(h)." The requirements enumerated by the statute are generally committed to the association’s discretion. [See Weldy v. Northbrook Condominium Assn., Inc. 279 Conn. 728, 738, 904 A.2d 188 (2006)].
The court was guided by two primary factors in determining whether a board of directors of the association acted reasonably under the law:
Although CIOA does allow condominium associations to act with broad discretion, it also contains specific rights and obligations of unit owners, as well as the board. For example, CIOA requires that the declaration, as well as the bylaws, outline the difference between the repair of a common element and the repair of an individual unit. Associations are required by law to maintain and repair common elements, but individual unit owners are responsible for repairing and maintaining their own individual units. Section 47-255 embodies this requirement and states: "Any portion of the common interest community for which insurance is required under this section which is damaged or destroyed shall be repaired or replaced promptly by the association."
The statute states that even if the cost to repair or maintain a common element exceeds insurance coverage, the association still may be responsible for the cost. "The cost of repair or replacement in excess of insurance proceeds and reserves, regardless of whether such excess is the result of the application of a deductible under the insurance coverage, is a common expense." General Statutes §47-255(h)(1).
Despite the direct language of the statute as to which party covers what repairs and maintenance, it does not specify how or when those obligations must be executed. In Canner, the court here noted that the statute "suggests that although an association is responsible for all common elements, the scope of the responsibility differs for uninsured versus insured common elements. As a result, a plain reading of the statutes and common sense support the conclusion that an association's responsibility to maintain and repair uninsured common elements, also echoed through both the declaration and bylaws, is not absolute."
The court also acknowledged the inherent conflict in assigning responsibility. On the one hand, maintaining the common elements is essential to maintain property values, but also may create an untenable expense for the association if those common elements are uninsured. (See Weldy v. Northbrook Condominium Assoc., Inc., supra, 279 Conn. 737). On the other hand, the court could not disregard CIOA, declaration and bylaws because owners of freestanding condos would potentially have no legal recourse to resolve the situation.
Although CIOA does not include a statute of limitations to govern claims brought pursuant to its provisions, a limitation period still applies to these cases. "Public policy generally supports the limitations of a cause of action in order to grant some degree of certainty to litigants." (See Bellemare v. Wachovia Mortgage Corp., 284 Conn. 199). "Therefore, when a statute includes no express statute of limitations, [the court] should not simply assume that there is no limitation period. Instead, we borrow the most suitable state of limitations on the basis of the nature of the cause of action or the right sued on."
In determining which statute of limitations was appropriate in this case, the court looked to whether the claims in question sounded more directly in contract or tort. Generally, claims that sound in tort arise from obligations imposed by law or policy and contract claims stem from protecting promises to perform a certain action. "The application of this dichotomy to the various categories of claims brought pursuant to §47-278 provides, at least in principle, for a commonsense rule: violations of duties imposed directly by CIOA sound in tort and are circumscribed by §52-577, whereas violations of the declaration or bylaws, by contrast, sound in contract and are governed by §52-576. [See Pasco Common Condominium Assn. Inc. v. Benson, 192 Conn. App. 479, 503, 218 A.3d 83 (2019)]. If the claim could sound in both contract and tort, the court is required to employ the statute of limitations that is the longer of the two. 51 Am. Jur. 2d 547, Limitation of Actions §76 (2016)."
Here, the court determined that the plaintiffs' case failed to allege that the declaration or bylaws were violated during the construction process. Although the complaint specifically alleged that the defendants violated the provisions of CIOA in the negligent design and construction of the units’ foundations, they did not allege that any provisions of the bylaws or declaration were violated. In an amended complaint they did allege that the defendants had not properly maintained, repaired, or replaced the defects found in the foundation, but they did not connect these claims to any breach during the construction process itself.
For this reason, the court concluded that the claims sounded in tort, as they addressed statutory, as opposed to contractual, violations. Therefore, the statute of limitation started to run at the time the decedents purchased the units in 2001 and 2002. Since these claims were not initiated until a decade after that purchase, the claims were outside the statute of limitations and time barred.
The plaintiffs also asserted that according to General Statutes §52-576, the defendants had a continuing contractual duty to maintain, repair, or replace common elements in the community. The defendant argued that it did not have a contractual or any absolute duty to repair the foundations.
The court reasoned that although repair and maintenance of common elements are within the discretion of the association board and not mandated under the bylaws or declaration, a legal duty existed on the part of the association. General Statutes §47-212. "When the contract contemplates the exercise of discretion, an obligation to exercise good faith, includes a promise not to act arbitrarily or irrationally in exercising that discretion." [See Dalton v. Educational Testing Service, 87 N.Y.2d 384, 389, 663 N.E.2d 289, 639 N.Y.S.2d 977 (1995)]. The court concluded that ruling “otherwise would permit the defendant to forgo even reasonable repairs without recourse to the unit owners, leaving them without the ability to seek judicial relief in the event the decision of the defendant exceeds its discretion."
The court found that plaintiffs’ claim the defendant breached its contractual duties under §5.2 of the bylaws by failing to repair the foundations supporting the decedents' units were, therefore, governed by §52-576(a), which provides in relevant part: "No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues…" The law concerning when a breach of a contract action accrues is well settled. "In an action for breach of contract… the cause of action is complete at the time the breach of contract occurs, that is, when the injury has been inflicted." [See Tolbert v. Connecticut General Life Ins. Co., 257 Conn. 188, 778 A.2d 1 (2001)]. "The true test is to establish the time when a plaintiff first could have successfully maintained an action." [See Engelman v. Connecticut General Life Ins. Co., 240 Conn. 287, 294 n.7, 690 A.2d 882 (1997)].
Ultimately, the Court found that the plaintiffs' claims sounding in contract had merit. The defendants repeatedly acknowledged the problems with the foundations and promised to make repairs. Although they did take some steps to start meaningful repairs, nothing was ever completed. Based on these facts, the court concluded that the defendant breached the bylaws by failing to repair the foundations under the units.
Therefore, the claims accrued at the time the defendant ceased its effort to repair. "A contract that creates continuing obligations is capable of a series of partial breaches or a single total breach by repudiation." [See Minidoka Irrigation District v. Dept. of Interior, 154 F.3d 924, 926 (9th Cir. 1998)]. Since the contractual claims were originally raised in 2018, the court concluded that they were timely.
In adjudicating the dispute between the plaintiffs and the condominium association, the court navigated through a labyrinth of legal intricacies inherent in condominium governance under the Common Interest Ownership Act. Through meticulous analysis, the court elucidated the distinction between claims sounding in tort and those arising from contractual obligations, as well as the appropriate statute of limitations governing such claims.
This article originally appeared on Wood Smith Henning & Berman LLP.
Kathleen F. Adams is a Partner at Wood Smith Henning & Berman LLP. kadams@wshblaw.com
Megan L. Michaud is Senior Counsel at Wood Smith Henning & Berman LLP. mmichaud@wshblaw.com
Recognizing and battling confirmation bias
Kathleen F. Adams is a Partner at Wood Smith Henning & Berman LLP. kadams@wshblaw.com
Megan L. Michaud is Senior Counsel at Wood Smith Henning & Berman LLP. mmichaud@wshblaw.com
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