Court Opinion

ID: 4013230
Source: CourtListenerOpinion
Date Created: 2016-07-06 13:03:34.247857+00
Date Added: 2024-06-11T12:13:05.814395
License: Public Domain

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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 equita-
ble 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 subroga-
tion 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 Insurance Company.
The trial court held that DiLullo did not bar the action.
We agree, and conclude that an action in equitable sub-
rogation was cognizable in the circumstances of this
case.
   In 2011, the plaintiff insurer commenced a subroga-
tion action against the defendant tenants. The plaintiff
claimed that it had indemnified the owner of the prem-
ises 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 sub-
rogation 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 defen-
dants 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 dam-
age to the premises. Mihalec filed a claim with his prop-
erty 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 con-
tained 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 suffi-
cient 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 provi-
sions obligating the tenants to pay for heating fuel, to
use the heating and cooling systems in a prudent man-
ner, 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 sec-
ond report as to breach of lease obligations and negli-
gence 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 Octo-
ber 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 circum-
stances 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. . . . Conven-
tional 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 pol-
icy, the court also held that whether subrogation was
appropriate was to be decided on a case-by-case analy-
sis 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 land-
lord’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 pol-
icy 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 land-
lord’s insurer . . . .’’ (Internal quotation marks omit-
ted.) These concerns were not implicated in the
circumstances of Wasko; there, a social houseguest neg-
ligently 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, eco-
nomic 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 land-
lord’s insurer. Such a rule would create a strong incen-
tive for every tenant to carry liability insurance in an
amount necessary to compensate for the value, or per-
haps 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 replace-
ment cost insured by the landlord under his fire insur-
ance policy. Thus, although the two forms of insurance
would be different, the economic interest insured 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 num-
ber 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 con-
sideration 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 con-
ceivably 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 sec-
ond DiLullo consideration was met because ‘‘the provi-
sions 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 obligat-
ing 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 land-
lord 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 responsi-
ble for any damage they negligently caused to the prem-
ises. 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 per-
sonal 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 Dwell-
ing which creates an unusual risk of fire or other hazard.
You will not allow the Dwelling to remain vacant for
more than fourteen (14) consecutive days without noti-
fying 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. . . . [Sec-
tion 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 rea-
sonable 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 insur-
ance 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 of their 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 appro-
priately 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 Seal Audio, Inc. v. Bozak, Inc., supra, 518. Practice Book § 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 default rule, at the earlier time 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 pre-
served.
   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 con-
cluded 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 condi-
tions, 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 consider-
ation 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
trial referee’s first report renders the attorney trial referee 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 that the defendants were not to 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 main-
tain the temperature in the dwelling at not less than 60 degrees. The defen-
dants 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 defen-
dants were to use all heating systems in a prudent manner.