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AMICA MUTUAL INSURANCE COMPANY v. ANDREW

MULDOWNEY ET AL.

(AC 37721)

Beach, Keller and West, Js.

Argued February 9—officially released July 12, 2016

(Appeal from Superior Court, judicial district of

Stamford-Norwalk, Hon. Taggart D. Adams [motion to

strike]; Povodator, J. [judgment].)

Daniel P. Scholfield, with whom, on the brief, were

Benjamin D. Gettinger and Rosalie D. Louis, for the

appellants (defendants).

Dennis M. Carnelli, with whom was Susan L. Miller,

for the appellee (plaintiff).
Opinion

BEACH, J. In DiLullo v. Joseph, 259 Conn. 847, 851,

792 A.2d 819 (2002), our Supreme Court held that a

property insurer was barred from maintaining an equitable subrogation action against a tenant possessing a

unit in a multiunit commercial building for harm that

the tenant caused to the entire building, where the lease

was silent as to the possibility of subrogation. The issue

in this case is whether DiLullo bars equitable subrogation in the different circumstances presented.

The defendants, Andrew Muldowney and Kalynn

Tupa, appeal from the judgment of the trial court in

favor of the plaintiff,Amica Mutual InsuranceCompany.

The trial court held that DiLullo did not bar the action.

We agree, and conclude that an action in equitable subrogation was cognizable in the circumstances of this

case.

In 2011, the plaintiff insurer commenced a subrogation action against the defendant tenants. The plaintiff

claimed that it had indemnified the owner of the premises for property damage caused by the tenants and it

sought to recover from them the amounts which it had

paid on behalf of the insured owner, John Mihalec, to

repair the damage. The action sounded in breach of

contract and negligence. The defendants filed a motion

to strike the complaint. The motion challenged the legal

sufficiency of the complaint; specifically, it alleged that

the plaintiff had failed to allege an express agreement

between the landlord and tenant recognizing that an

insurance company may have the ability to bring a subrogation action. In a September 13, 2011 memorandum

of decision, the court, Hon. Taggart D. Adams, judge

trial referee, denied the defendants’ motion to strike,

reasoning that ‘‘the lease executed by the defendants

put them on notice that they would be liable for more

than just the rent and security deposit under certain

circumstances,’’ and that the ‘‘default rule,’’ as

expressed in DiLullo, did not bar the action.

The matter was referred to an attorney trial referee

for fact finding pursuant to General Statutes § 52-434

(a) (4) and Practice Book § 19-2A. Following a trial, the

referee issued a report dated January 24, 2014. The

referee found as follows. On April 29, 2009, the defendants entered into a lease with Mihalec, the owner of

residential premises at 7 Hervey Street in Greenwich.

The defendants left the premises on December 21 or

22, 2009, and returned on January 5, 2010. During their

absence, a radiator burst, causing extensive water damage to the premises. Mihalec filed a claim with his property insurer, the plaintiff, which expended sums to

repair the premises. The referee declined to consider

the claims of breach of contract and negligence. Rather,

the report concluded that the default rule expressed in

DiLullo v. Joseph, supra, 259 Conn. 847, mandated that,
in order for the plaintiff to have the ability to maintain

an action in equitable subrogation, the lease agreement

between the defendants and Mihalec must have contained a provision expressly authorizing subrogation.

Because the lease agreement contained no such express

subrogation provision, the plaintiff could not prevail on

its claims against the defendants.

The court, Povodator, J., suo motu, moved to accept

the referee’s report. The plaintiff filed an objection. In

an October 8, 2014 memorandum of decision, the court

declined to accept the report. The court noted that the

function of an attorney trial referee is to find facts and

that it is the responsibility of the Superior Court to

draw legal conclusions from the facts found. The court

concluded that the provisions of the lease were sufficient to avoid the default rule in DiLullo, and that the

defendants lawfully could be liable for losses resulting

from their negligence or breach of contract. The court

remanded the case to the referee for further factual

findings regarding liability and damages.

The referee found the following relevant facts in a

second report. The parties entered into a lease

agreement for the premises, which contained provisions obligating the tenants to pay for heating fuel, to

use the heating and cooling systems in a prudent manner, not to negligently or wilfully damage the premises,

and to pay all damages arising from a broken promise

under the lease.

As noted previously, the defendants left the premises

vacant for approximately two weeks in December, 2009,

and January, 2010. The defendants failed to provide for

a sufficient amount of oil for the furnace to operate

during their absence. During the defendant’s absence

from the premises, the furnace stopped functioning.

For a period of time, there was no heat in the premises,

and a radiator on the second floor froze. The radiator

burst, causing extensive water damage to the lower

floor of the premises. Mihalec filed a claim with the

plaintiff, which expended sums to repair the premises.

The referee recommended that judgment enter in favor

of the plaintiff in the amount of $61,302.70.

The court moved, suo motu, to accept the second

report. Neither party filed an objection. In a February

5, 2015 memorandum of decision, the court adopted

the procedural and factual summary contained in the

first report and concluded that the findings in the second report as to breach of lease obligations and negligence led it to conclude that judgment should enter in

favor of the plaintiff as against both defendants on all

four counts of the complaint in the amount of

$61,302.70. This appeal followed.

On appeal, the defendants challenge the court’s October 8, 2014 decision denying the motion to accept the

referee’s first report, and its February 5, 2015 decision
rendering judgment in favor of the plaintiff.1 The court

rejected the referee’s conclusion in the first report that

the subrogation was not appropriate in the circumstances of this case; and the court accepted the referee’s

second report, which found the defendants liable. The

substance of each of these claims is the same. The

defendants argue that the default rule set forth in

DiLullo precludes subrogation.2

Our review of the court’s legal conclusion, that an

ability to pursue subrogation existed, is plenary. ‘‘The

trial court’s legal conclusions are subject to plenary

review. [W]here the legal conclusions of the court are

challenged, we must determine whether they are legally

and logically correct and whether they find support in

the facts set out in the memorandum of decision . . . .’’

(Internal quotation marks omitted.) Hartford Fire Ins.

Co. v. Warner, 91 Conn. App. 685, 687–88, 881 A.2d

1065, cert. denied, 276 Conn. 919, 888 A.2d 99 (2005),

‘‘The law has recognized two types of subrogation:

conventional; and legal or equitable. . . . Conventional subrogation can take effect only by agreement

and has been said to be synonymous with assignment.

It occurs where one having no interest or any relation

to the matter pays the debt of another, and by agreement

is entitled to the rights and securities of the creditor so

paid. . . . By contrast, [t]he right of [legal or equitable]

subrogation is not a matter of contract; it does not arise

from any contractual relationship between the parties,

but takes place as a matter of equity, with or without

an agreement to that effect. . . . The object of [legal

or equitable] subrogation is the prevention of injustice.

It is designed to promote and to accomplish justice,

and is the mode which equity adopts to compel the

ultimate payment of a debt by one who, in justice,

equity, and good conscience, should pay it.’’ (Citations

omitted; internal quotation marks omitted.) Wasko v.

Manella, 269 Conn. 527, 532, 849 A.2d 777 (2004).

In DiLullo v. Joseph, supra, 259 Conn. 851, our

Supreme Court addressed the question of whether the

insurer of the owner of commercial premises could

pursue an equitable subrogation action against a tenant

for property damage caused by the tenant, where there

was no authorization to do so in the leasing documents.

In DiLullo, the tenant leased but one unit in a multiunit

building. Holding that the landlord and the tenant were

not deemed to be coinsureds under the landlord’s policy, the court also held that whether subrogation was

appropriate was to be decided on a case-by-case analysis of the circumstances of each case. Id., 853. The

court established the default rule that, in the absence

of agreement to the contrary, a landlord’s insurer has

no right of subrogation against the landlord’s tenant.

Id., 854. In doing so, it stated: ‘‘[W]e recognize that

tenants and landlords are always free to allocate their

risks and coverages by specific agreements, in their
leases or otherwise. The question posed by this appeal,

however, is what the appropriate default rule of law

should be where, as here, the parties have not made

such an agreement. Our strong public policy against

economic waste, and the likely lack of expectations

regarding a tenant’s obligation to subrogate his landlord’s insurer, lead us to conclude that, as a default

rule, no such right of subrogation exists.’’ (Footnote

omitted.) Id., 851.

In Wasko v. Manella, supra, 269 Conn. 545, our

Supreme Court noted that the two equitable concerns

expressed in DiLullo were: ‘‘(1) [o]ur strong public policy against economic waste, which would not be served

by requiring multiple insurance policies on the same

piece of property; and (2) the likely lack of expectations

regarding a tenant’s obligation to subrogate his landlord’s insurer . . . .’’ (Internal quotation marks omitted.) These concerns were not implicated in the

circumstances of Wasko; there, a social houseguest negligently damaged a host’s property and subrogation was

pursued against the guest. Id., 529. The court stated

that social houseguests may expect to be liable for

negligent conduct in a host’s home. See id., 550.

The first consideration mentioned in DiLullo, economic waste, is not implicated in this case. In DiLullo

v. Joseph, supra, 259 Conn. 854, which involved a tenant

who leased a single unit in a multitenant building, our

Supreme Court stated that the strong public policy

against economic waste ‘‘convinces us that it would be

inappropriate to create a default rule that allocates to

the tenant the responsibility of maintaining sufficient

insurance to cover a claim for subrogation by his landlord’s insurer. Such a rule would create a strong incentive for every tenant to carry liability insurance in an

amount necessary to compensate for the value, or perhaps even the replacement cost, of the entire building,

irrespective of the portion of the building occupied by

the tenant. That is precisely the same value or replacement cost insured by the landlord under his fire insurance policy. Thus, although the two forms of insurance

would be different, the economic interestinsured would

be the same. This duplication of insurance would, in

our view, constitute economic waste and, in a multiunit

building, the waste would be compounded by the number of tenants. . . . We think that our law would be

better served by having the default rule of law embody

this policy against economic waste, and by leaving it

to the specific agreement of the parties if they wish

a different rule to apply to their, or their insurers’,

relationship.’’ (Citation omitted.) Id. In Hartford Fire

Ins. Co. v. Warner, supra, 91 Conn. App. 686, this court

determined that an action of subrogation could be

brought against a tenant in a duplex building whose

guest negligently started a fire. With respect to the consideration of economic waste, the court stated: ‘‘Here,

unlike DiLullo, the public policy against economic
waste is not reasonably implicated. Rather, in this

instance, the court was faced with a duplex residence,

not a multitenant building. At most, the realization of

a right of subrogation may cause the existence of two

insurance policies on the same property, admittedly an

overlap but not palpably wasteful as in DiLullo.’’ Id.,

691–92. Likewise, the present case does not involve a

multitenant building as in DiLullo, but rather involved

a detached single-family residence. Although there conceivably could be two policies implicated in the present

case, one paid for by the landlord and one by the renter,

excessive waste is demonstrably lacking. Accordingly,

the rationale in Hartford Fire Ins. Co. v. Warner applies

to the present case.

The second consideration in DiLullo, the likely lack

of expectation regarding a tenant’s obligation to be

subject to subrogation, is also not present. By contrast,

Middlesex Mutual Assurance Co. v. Vaszil, 279 Conn.

28, 33, 900 A.2d 513 (2006), involved a subrogation claim

by the landlord’s insurer against a tenant in a multiunit

residential building. In that case, the insurer claimed

that the tenant negligently caused a fire, resulting in

damages. Our Supreme Court concluded that the second DiLullo consideration was met because ‘‘the provisions of the lease obligating the tenant not to cause

damage to the apartment and to be responsible for

repairing any such [damage] . . . do not rise to a level

of creating an express agreement noticing and obligating the tenant to be responsible for the fire loss . . .

[and] that no other provision of the lease creates such

an obligation.’’ (Internal quotation marks omitted.) Id.,

33. The court further reasoned that the lease did ‘‘not

remotely inform the [tenant] defendants that they would

be liable to their landlord’s insurer for any casualty fire

damages to the landlord’s building. It informs them

neither of the need to insure only their apartment, nor

of the need to obtain insurance in an amount sufficient

to cover the value of the entire multiunit apartment

building.’’ (Footnote omitted.) Id., 37. In Hartford Fire

Ins. Co. v. Warner, supra, 91 Conn. App. 692–93, on the

other hand, this court held that ‘‘the agreement between

the parties belies any claim by the defendant that she

did not expect to be held accountable for her negligent

acts or those of her houseguests. As noted, the parties’

lease stated: ‘Landlord is not liable for loss, expense

or damage to any person or property unless it is due

to Landlord’s negligence. Tenant must pay for damages

suffered and money spent by Landlord relating to any

claim arising from any act or neglect of Tenant. Tenant

is responsible for all acts of Tenant’s family, employees,

guests and invitees.’ Thus, by the terms of the lease it

was plainly within the contemplation of the defendant

that she would be liable for damages caused by her

acts and those of her guests.’’

The lease in the present case objectively created a

stronger expectation of liability on the part of the tenant
than that in Hartford Fire Ins. Co. and surely stronger

than that in Middlesex Mutual Assurance Co. The trial

court concluded that the lease provisions between landlord and tenant ‘‘were more than adequate to meet the

requirements of the holding in DiLullo . . . to avoid

the default rule.’’ We agree that the notice provided to

the defendants in the lease was sufficient to avoid the

DiLullo default rule.

Although the lease in the present case did not contain

an express provision regarding subrogation, it is clear3

from the lease that the defendants were to be responsible for any damage they negligently caused to the premises. The lease provided in relevant part: ‘‘[Section 4.]

You agree . . . to use all electric, cooling and other

systems in the Dwelling in a prudent manner . . . to

not willfully or negligently destroy, deface, damage,

impair or remove any part of the Dwelling or permit

anyone else to do so . . . to provide and pay for personal liability insurance for your and our mutual benefit

in an amount of not less than $1,000,000 for bodily

injury and property damage in or about the Dwelling.

You will provide us with proof of such insurance. . . .

[Section 8.] You will not permit any activity in the Dwelling which creates an unusualrisk of fire or other hazard.

You will not allow the Dwelling to remain vacant for

more than fourteen (14) consecutive days without notifying us in advance of the planned vacancy. During any

such vacancy, you agree to maintain the temperature

in the dwelling at not less than 60 degrees. You shall

not be absolved of any of your obligations under this

Lease during any such vacancy. . . . [Section 13.] If

you break any of your promises in this Lease . . . you

will pay us all lost rent and other damages or costs we

may incur because of your broken promises. . . . [Section 21.] You will not damage the Dwelling or permit

damage to be done to it. . . . [Section 29.] You will

hold us harmless from any loss or claim arising out of

or in connection with your use and occupancy of the

dwelling and property, including court costs and reasonable attorney’s fees.’’

The lease, then, clearly stated that the defendants

were to use all heating systems in a prudent manner.4

If the defendants broke any promise in the lease, they

were to pay all damages and costs associated with that

broken promise. They were required to obtain insurance and to hold the landlord harmless. The defendants

had adequate notice that they could well be held liable

for all costs resulting from damage to the premises

negligently caused by their failure to maintain the heat

properly during their vacancy. Accordingly, the court

properly concluded that the policy against economic

waste was not implicated in this situation involving a

single family dwelling and that the lease provisions gave

the defendants the reasonable expectation that they

would be liable for the damages associated with their

negligent maintenance of the heating system during
their absence, such that the default rule in DiLullo did

not apply and the landlord’s insurer was not barred from

pursuing a subrogation action against the defendants.

The judgment is affirmed.

In this opinion the other judges concurred.

1 The defendants also challenged the denial oftheir motion to strike.At oral

argument before this court, the defendant’s attorney withdrew this claim.

2 The plaintiff also argues that by failing to file an objection to the court’s

motion to accept the second report pursuant to Practice Book § 19-14 or

otherwise, the defendants waived their claim that the court improperly

granted the motion to accept the second report of the attorney referee.

We disagree.

Attorney referees are fact finders, not judges and have no power to render

judgments. Seal Audio, Inc. v. Bozak, Inc., 199 Conn. 496, 501–502, 508 A.2d

415 (1986). The reports of referees are ‘‘reviewable in accordance with well

established procedures prior to the rendition of judgment by the court.

Practice Book §§ 428 through 445 [now Practice Book §§ 19-1 through 19-

19]. . . . [T]he trial court has the power to render whatever judgment appropriately follows, as a matter of law, from the facts found by the attorney

trial referee.’’ (Citations omitted; internal quotation marks omitted.) Dills

v. Enfield, 210 Conn. 705, 712–13, 557 A.2d 517 (1989). The absence of any

objection, such as an objection to the acceptance of the referee’s report

pursuant to Practice Book § 19-14, precludes effective appellate review and,

accordingly, factual conclusions based on the referee’s report must stand.

See SealAudio,Inc. v. Bozak,Inc., supra, 518. PracticeBook § 19-14 provides

that ‘‘[a] party may file objections to the acceptance of a report on the

ground that conclusions of fact stated in it were not properly reached . . . .’’

(Emphasis added).

The lack of a § 19-14 motion does not prevent us from reviewing the

court’s legal conclusion. ‘‘[B]ecause the attorney trial referee does not have

the powers of a court and is simply a fact finder, [a]ny legal conclusions

reached by an attorney trial referee have no conclusive effect. . . . The

reviewing court is the effective arbiter of the law and the legal opinions of

[an attorney trial referee], like those of the parties, though they may be

helpful, carry no weight not justified by their soundness as viewed by the

court that renders judgment. . . . Where legal conclusions are challenged,

we must determine whether they are legally and logically correct and

whether they find support in the facts found by the . . . referee.’’ (Internal

quotation marks omitted.) Paluha v. Braverman Group, LLC, 80 Conn. App.

620, 627–28, 836 A.2d 1219 (2003).

The defendants filed a memorandum of law in support of the acceptance

of the referee’s first report; they set forth their position that the default rule

in DiLullo applied to bar liability. The court clearly stated in its order

regarding the first report that subrogation was not precluded and the default

rule in DiLullo did not apply. It referred the matter to the referee for findings

regarding the merits of the plaintiff’s claims. The second report found in

favor of the plaintiff on those claims. The defendants, then, preserved their

claim regarding the DiLullo defaultrule, at the earliertime in the proceeding.

Their failure to express their position on DiLullo again, after the referee

issued a report on the issues of negligence, breach of contract and damages,

did not serve to waive their earlier position on DiLullo. The issue is preserved.

The plaintiff also argues that the defendants’ failure specifically to assert

their position after the court’s ruling on the motion to accept the first report

renders their claim on appeal as to that issue unreviewable. The plaintiff

has not cited persuasive authority serving to preclude the defendants from

obtaining appellate review in the absence of a formal objection to the

interlocutory ruling. The defendant’s position was presented and argued to

the trial court, which then ruled.

3 The defendants argue that, for additional reasons, the court erred in

rejecting the conclusion of the attorney trial referee’s first report that the

default rule in DiLullo applied. First, they argue that the lease provisions

were ambiguous and that the referee’s findings in the first report regarding

the intent of the parties should prevail. In the first report, the referee concluded that an express provision in the lease allowing for subrogation was

necessary under DiLullo and, because the lease was ambiguous in that

regard, it did not meet the DiLullo criteria for avoiding the default rule.

The trial court rejected that contention and concluded that, although the
lease did not ‘‘contain the word ‘subrogation’, or any derivation thereof,

there is a very express allocation of liability on the defendants . . . . The

defendants had ample notice that under certain expressly spelled-out conditions, they would owe Mihalec money and whether Mihalec, or [the plaintiff],

which reimbursed Mihalec’s loss, pursued the defendants for that money is

inconsequential. The court finds that the substance of the lease agreement—

that liability for losses resulting from negligence or breach of the lease fell

upon the tenants—was clear.’’

The court did not err in declining to accept the legal conclusion contained

in the attorney trial referee’s first report. See Paluha v. Braverman Group,

LLC, 80 Conn. App. 620, 627–28, 836 A.2d 1219 (2003) (legal conclusions of

attorney trial referees have no conclusive effect). Whether the language of

a contract is ambiguous is a question of law subject to plenary review. United

Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 669–70, 791

A.2d 546 (2002); see David Caron Chrysler Motors, LLC v. Goodhall’s, Inc.,

304 Conn. 738, 746–47, 43 A.3d 164 (2012) (lease is contract). The relevant

language in the lease is clear and unambiguous as to responsibilities of the

defendants. Whether the contractual language satisfies the second consideration in DiLullo is a question of law subject to plenary review. See Hartford

Fire Ins. Co. v. Warner, supra, 91 Conn. App. 687–88.

Second, the defendants contend that the court’s rejection of the attorney

trialreferee’s firstreportrenders the attorney trialreferee program pointless.

We do not agree. Attorney referees are fact finders, not judges. Seal Audio,

Inc. v. Bozak, Inc., supra, 199 Conn. 501–502. Throughout the process, the

court accepted the attorney referee’s factual findings but made its own

legal conclusions.

Third, the defendants argue that the court improperly relied on the denial

of the defendant’s motion to strike as a basis for rejecting the attorney trial

referee’s report. We do not agree. The court interpreted DiLullo and its

progeny and, employing de novo review, reached the legal conclusion that

the lease was sufficient to avoid the default rule. In any event, it was

not necessarily erroneous to reach the same result that another judge had

previously reached.

4 The lease also provided thatthe defendants were notto allow the dwelling

to remain vacant for more than fourteen consecutive days without notifying

the landlord and that during any such vacancy, the defendants would maintain the temperature in the dwelling at not less than 60 degrees. The defendants were absent from the dwelling from December 21 or 22 until January

5 of the following year. In the second report, which the trial court accepted,

the attorney trial referee found that the provision of the lease relating to

temperature that was breached was the provision requiring that the defendants were to use all heating systems in a prudent manner.