Opinion ID: 2326915
Heading Depth: 1
Heading Rank: 6

Heading: motion for order of accounting

Text: The defendants claim that the trial court improperly granted the plaintiffs' motion for an order of accounting because the plaintiffs did not plead or prove that they had demanded an accounting prior to initiating the present action, as required under Connecticut law. See Zuch v. Connecticut Bank & Trust Co., 5 Conn.App. 457, 461-63, 500 A.2d 565 (1985). [30] The defendants contend that the plaintiffs did not use the term accounting in its general sense but requested an accounting, as that term is used in General Statutes § 52-401 et seq., [31] so that they could claim at some future date that the trial court previously had found that they were entitled to damages from the defendants for any diminution in the value of the Parish property before being compelled to relinquish it to the plaintiffs. The defendants further contend that the plaintiffs were not entitled to an accounting because they failed to plead the statute relied on, as required under Practice Book § 10-3, [32] and because any claim for damages against the defendants would be barred by General Statutes § 52-557m [33] and 42 U.S.C. § 14503. [34] The plaintiffs respond that the trial court did not grant their motion in reliance on the accounting statutes but, rather, under its equitable authority, and that the order merely was intended to provide for an inspection and inventory of the Parish assets. We agree with the plaintiffs. The plaintiffs alleged in paragraph sixty-eight of their complaint, dated April 30, 2008, that Bishop Andrew Smith had demanded, on behalf of the Diocese, that the defendants relinquish their right to possess and use all real and personal property of the Parish on or before January 20, 2008, but that the defendants had refused to comply with those demands. The plaintiffs also alleged in paragraph seventy-two that, on April 15, 2008, Reverend Cannon had gone to the property to assume his duties as priest in charge and had asked Reverend Gauss to turn over the keys and all pertinent parish records but that Reverend Gauss had refused to comply. The plaintiffs further alleged in paragraph seventy-four that, as of the date of the complaint, the defendants had continued to refuse to surrender possession and control of the property of the Parish and had continued to use the property for an organization that was not in communion with the Episcopal Church. Accordingly, in light of the defendants' unwillingness to grant Reverend Cannon possession and use of the property, the plaintiffs requested, in addition to declaratory and injunctive relief, that the trial court order an accounting of the property. On March 15, 2010, the trial court granted the plaintiffs' motion for summary judgment and denied the defendants' motion for summary judgment. The court also granted the plaintiffs' request for declaratory and injunctive relief, concluding that the real and personal property of [the] Parish [is] held in trust for the Diocese ... and the Episcopal Church, and that the defendants [were] without any right, title, interest or authority to occupy, use of possess the real and personal property [of the Parish], and ordered that the defendants and all others acting under their control or direction refrain from wasting, selling, transferring, conveying or encumbering any of [the] real and personal property. In addition, the court ordered that, [w]ithin sixty days, the plaintiffs may move further for any orders of accounting. Any such motion shall be specific as to the type and nature of the accounting requested. The court shall retain jurisdiction for the implementation of these orders. On April 7, 2010, the plaintiffs filed a motion for an order of accounting pursuant to the equitable powers of the [c]ourt set forth in General Statutes § 52-401 et seq. (accounting statutes). In their motion, the plaintiffs stated that the last audited accounting that they had received from the defendants was for the period ending December 31, 2006 (2006 report), which disclosed that the [d]efendants or their predecessors on the vestry of the Parish had custody or control of cash, investment, endowment and trust accounts or funds with an aggregate value of $320,034.55.... The plaintiffs thus proposed an accounting order that would include, among other things, the appointment of an auditor with all of the powers and duties set forth in the accounting statutes, the production of all requested records of financial transactions by the Parish since issuance of the 2006 report and the granting of permission for the plaintiffs' representatives to make an inventory of all personal property and records located on the real property of the Parish or in any other location owned or controlled by the defendants or persons acting under their control or direction. On April 14, 2010, the defendants filed an objection to the motion in which they claimed that the plaintiffs' request for an order of accounting was, in reality, a claim for damages, and that, because the plaintiffs had claimed no damages in their complaint, there was no basis for such an award. They specifically argued that the allegations in the plaintiffs' complaint had been limited to prospective remedies, namely, declaratory and injunctive relief, and that any claim for damages would be inconsistent with such relief and barred by General Statutes § 52-557m and 42 U.S.C. § 14503. They also argued that the attorney general was responsible for monitoring funds devoted to charitable purposes under General Statutes § 3-125 and that the attorney general had represented to the trial court on October 16, 2008, that the matters litigated in this case do not concern the use of charitable funds contrary to a charitable purpose. (Internal quotation marks omitted.) On April 15, 2010, the trial court held a hearing on the motion. At the hearing, the plaintiffs argued that an accounting was necessary for the purpose of making a list of Parish assets to be turned over by the defendants. The defendants countered that, although the plaintiffs had suggested that the accounting would consist of an inventory of Parish assets, they, in fact, were seeking information regarding money spent by the Parish so that they could make a future backdoor ... claim for damages.... The defendants argued that the complaint did not include a claim for damages, and, therefore, if the plaintiffs had wanted an accounting, they should have pleaded that they had requested an accounting before they brought the action. The defendants also argued that any claim premised on a statute must identify the statute in the pleadings, which the plaintiffs had failed to do. The defendants reiterated that they were not objecting to an inventory but to an end run to try to get money out of the ... defendants.... The plaintiffs responded that the accounting was the same as the relief requested in the complaint and that the purpose of such an accounting was to determine the assets that were present at the time Reverend Cannon had gone to the Parish for the keys to the property in order to ensure that the assets would be turned over to the plaintiffs. The trial court declined to issue the plaintiffs' proposed order and to appoint an auditor under the accounting statutes but indicated that it might grant a request for an accounting under its equitable authority and discretion, irrespective of the accounting statutes. The court stated that it first contemplated an inventory of the personal property because the real [property] is what it is, and possibly a production of books and records, more specifically financial records, so that they may either be reviewed or audited by an accountant. I might also entertain a tour and inspection of the facilities. I think I would contemplate matters of that nature but not the [plaintiffs'] proposed order.... The court thus suggested that the plaintiffs submit another proposed order and that the defendants file a written response. The parties complied with the trial court's request, and, on June 2, 2010, the court granted the plaintiffs' motion and ordered an accounting on the basis of the plaintiffs' second proposed order. The court specifically ordered the defendants (1) to produce, within thirty days, all books and financial records of the Parish... from January 1, 2007, to the date of the production, (2) [to] permit the plaintiffs' representatives to make periodic tours and inspections of the Parish real property and buildings according to the schedule described therein, and (3) to permit the plaintiffs' representatives to take an inventory of all tangible personal property of the Parish, whether located on the Parish property or in any other location owned or controlled by any of the defendants or persons acting under their control or direction, within twenty-one days. The court retained jurisdiction for purposes of the order's implementation. On June 18, 2010, the defendants amended their appeal to include claims relating to the order of accounting. This court previously has recognized that it is within the equitable powers of the trial court to fashion whatever orders [are] required to protect the integrity of [its original] judgment. (Internal quotation marks omitted.) Rocque v. Light Sources, Inc., 275 Conn. 420, 433, 881 A.2d 230 (2005); see also Commissioner of Health Services v. Youth Challenge of Greater Hartford, Inc., 219 Conn. 657, 670, 594 A.2d 958 (1991) ([c]ourts have in general the `power to fashion a remedy appropriate to the vindication of a prior ... judgment' [internal quotation marks omitted]). In the present case, the trial court rejected the plaintiffs' original request for an order of accounting pursuant to the accounting statutes. When the court granted the plaintiffs' second request, it explained that it was granting the order on the basis of its equitable authority and discretion to protect the integrity of its prior declaration that the real and personal property of the Parish was held in trust for the Episcopal Church and the Diocese and to protect its order enjoining the defendants and others from wasting, selling, transferring, conveying or encumbering any of [the] real and personal property. The trial court further explained at a subsequent hearing on the plaintiffs' motion to compel compliance with the order of accounting that it had been premised on the broad equitable authority of the court to issue such orders as may be necessary to effectuate the court's orders and to protect the plaintiffs' interests in the property at issue during the appeal.... To clarify further, the court emphasizes the following. The court's order of June 2, 2010 ... [was] in the nature of orders of inspection or production in that [it was] limited and directed to allowing the plaintiffs to acquire information to facilitate the maintenance of the status quo pending appeal.... Specifically, the June 2, 2010 [order] ... direct[s] the defendants to allow [the] plaintiffs access to records and the property of the Parish for review, inspection and possible inventory. [This order is] consistent with and operate[s] to ensure compliance with the court's orders that the defendants not waste, transfer or remove any of the property and for the defendants to use operating income only for expenses in the ordinary course .... Accordingly, we conclude that the defendants' claim, which is premised on the plaintiffs' purported reliance on the accounting statutes and on the theory that the plaintiffs were seeking damages, has no merit.