author: PETERS, J.

text:
    NEW MILFORD SAVINGS BANK v. MAURICE J. JAJER ET AL.
    (SC 15695)
    Callahan, C. J., and Borden, Berdon, Norcott, Katz, Palmer and Peters, Js.
    Argued January 13
    officially released March 31, 1998

      Kenneth J. Bartschi, with whom were Wesley W. Horton and Michael J. Mannion, for the appellant (plaintiff).

      George M. Purtill, with whom was Seth Jacoby, for the appellees (named defendant et al.).
   Opinion

PETERS, J.

The issue in this appeal is whether General Statutes §§ 49-15 and 49-1 deprive the Superior Court of jurisdiction to open a foreclosure judgment in order to correct the inadvertent omission of a parcel of the mortgaged property from the judgment. The plaintiff, the New Milford Savings Bank (bank), brought an uncontested action against the defendants Maurice and Maria Jajer, for foreclosure of a mortgage that they had executed as security for a $270,000 loan. Although the mortgage conveyance included three parcels of land, two vacant parcels and a third parcel containing the defendants’ residence, the bank mistakenly had referred only to a description of the two vacant parcels in its foreclosure complaint and lis pendens. On August 22,1994, the trial court, Pickett, J., rendered a judgment of strict foreclosure against only the two parcels described in the bank’s complaint. The court found the mortgage debt to be $308,181.11 and the value of the property to be $170,000 based on an appraisal of all three parcels. In the absence of redemption of the property by the defendants or any other lien holder, title vested absolutely in the bank with the passage of the last law days on September 26, 1994.

Soon thereafter, the bank discovered its mistake in the course of federal bankruptcy proceedings initiated by the defendants’ prayer for relief under chapter 11 of the Bankruptcy Code. 11 U.S.C. § 362. In order to enforce its state court judgment, the bank moved the United States Bankruptcy Court, Krechevsky, J., to lift the automatic stay provision of the Bankruptcy Code. Relying on the defendants’ concession that the bank’s mortgage remained in effect on the omitted third parcel, the Bankruptcy Court found that the defendants retained no equity in the third parcel. The court concluded that the bank had a colorable claim to the third parcel and, on February 23, 1995, lifted the stay to enable the bank “to take whatever action is appropriate in state court under the circumstances.”

Returning to Superior Court, the bank moved to open the judgment of strict foreclosure. Despite the defendants’ objection, the court, R. Walsh, J., granted the motion and permitted the bank to file an amended complaint requesting new law days for the omitted third parcel. On May 15, 1995, the trial court, Pickett, J., granted the bank’s motion to render “judgment of strict foreclosure upon the amended complaint containing all other terms previously entered . . . .”

Before the law day on the third parcel had passed, the defendants appealed to the Appellate Court, which reversed the judgment of the trial court in light of its conclusion that the trial court lacked jurisdiction to open the 1994 foreclosure judgment. The court construed the last sentence of § 49-15 to preclude further trial court jurisdiction after title has vested in the foreclosing mortgagee with respect to any part of the mortgaged property. New Milford Savings Bank v. Jajer, 44 Conn. App. 588, 594-95, 691 A.2d 598 (1997). In addition, the court construed § 49-1 to preclude the bank from seeking further relief because its failure to pursue a deficiency judgment had the effect of discharging the defendants from further liability on the underlying note. Id., 595-96.

The bank filed a petition for certification to appeal to this court. We granted certification to consider only the following question: “Did the Appellate Court properly conclude that the trial court lacked jurisdiction to open the judgment of foreclosure based on General Statutes §§ 49-15 and 49-1?” New Milford Savings Bank v. Jajer, 241 Conn. 906, 695 A.2d 540 (1997). We disagree with the conclusion of the Appellate Court that the trial court lacked jurisdiction to render the 1995 foreclosure judgment.

I

We consider, first, the defendants’ claim that § 49-15 deprived the trial court of jurisdiction to grant the bank’s motions to open the judgment of foreclosure and to file an amended foreclosure complaint to correct the bank’s inadvertent omission of the third parcel from its original complaint. Relying on the language of § 49-15 that “no such judgment [of strict foreclosure] shall be opened after title has become absolute in any encum-brancer,” the Appellate Court agreed with the defendants that the statute applied to any mortgage foreclosure, total or partial. New Milford Savings Bank v. Jajer, supra, 44 Conn. App. 594. We construe the statute differently.

A

The law governing strict foreclosure lies at the crossroads between the equitable remedies provided by the judiciary and the statutory remedies provided by the legislature. In re American Metal Products Co., 276 F.2d 701, 704 — 705 (2d Cir. 1960); see Federal Deposit Ins. Corp. v. Hillcrest Associates, 233 Conn. 153, 164-74, 659 A.2d 138 (1995). Because “foreclosure is peculiarly an equitable action . . . the court may entertain such questions as are necessary to be determined in order that complete justice may be done.” Hartford Federal Savings & Loan Assn. v. Lenczyk, 153 Conn. 457, 463, 217 A.2d 694 (1966); see Chappell v. Jardine, 51 Conn. 64, 69 (1883) (court of equity can devise appropriate remedy for enforcement of lawful lien). In exercising its equitable discretion, however, the court must comply with mandatory statutory provisions that limit the remedies available to a foreclosing mortgagee. Nau-gatuck Savings Bank v. Fiorenzi, 232 Conn. 294, 305, 654 A.2d 729 (1995). It is our adjudicatory responsibility to find the appropriate accommodation between applicable judicial and statutory principles. “Just as the legislature is presumed to enact legislation that renders the body of the law coherent and consistent, rather than contradictory and inconsistent . . . [so] courts must discharge their responsibility, in case by case adjudication, to assure that the body of the law — both common and statutory — remains coherent and consistent.” (Citations omitted.) Fahy v. Fahy, 227 Conn. 505, 513-14, 630 A.2d 1328 (1993).

The equitable nature of foreclosure proceedings persuades us that § 49-15 does not preclude the trial court from exercising its discretion to open the judgment of strict foreclosure in the circumstances of this case. To apply the statutory mandate that, “after title [to real estate] has become absolute in any encumbrancer,” a judgment of foreclosure cannot be opened, we must identify the property for which “title has become absolute.” The statute describes the relevant property as the “real estate” that was the subject of the initial foreclosure judgment. On its face, the statute makes no distinction between partial and total foreclosures. Whether the statute bars the bank’s motion to open and amend the initial strict foreclosure judgment depends, therefore, on whether the terms of the 1994 foreclosure vested title in the bank to two or to three parcels of land. The trial court has the authority to determine the scope of the initial foreclosure judgment, and, therefore, whether the foreclosure judgment properly may be opened under § 49-15.

Before exercising its discretion to open the initial foreclosure to permit the bank to amend its complaint, the trial court properly held a hearing to assist it in deciding what property was covered by the original 1994 foreclosure judgment. See Hartford Federal Savings & Loan Assn. v. Lenczyk, supra, 153 Conn. 463 (inquiry into relevant circumstances was required to fulfill judiciary’s equitable obligation “in order that complete justice may be done”). In this case, it was entirely reasonable for the court to conclude that the original foreclosure judgment encompassed only the two vacant parcels and not the third improved parcel. The foreclosure complaint itself was so limited, and the defendants conceded that “the Bank’s mortgage remains on the third parcel . . . .”

The legal effect of the bank’s inadvertent omission was that the title to the third parcel remained under a cloud. As would be true for any mortgaged property in Connecticut before foreclosure, the bank’s title was a fee simple subject to defeasance by the defendants’ exercise of their equity of redemption. State v. Stonybrook, Inc., 149 Conn. 492, 496, 181 A.2d 601, cert. denied, 371 U.S. 185, 83 S. Ct. 265, 9 L. Ed. 2d 227 (1962). Thus, the bank’s title to the third parcel was not absolute. Because no one had absolute title to the third parcel at the time of the bank’s motion to open and to amend, § 49-15 did not limit the jurisdiction of the trial court to exercise its equitable discretion and modify the scope of the 1994 foreclosure judgment with respect to the third parcel.

Moreover, as best we can determine, the legislature’s purpose in enacting § 49-15 was not to preclude amendment to correct scrivener’s errors, but rather to set out an orderly framework for a mortgagee’s exercise of the equity of redemption. We have no access to the legislative history of § 49-15 because the original statute was enacted prior to the inauguration of published legislative history in 1945. Legislators’ remarks on subsequent amendments to § 49-15, however, emphasize that the purpose of § 49-15 is to ensure equitable foreclosure proceedings. For example, in 1967, when Public Acts 1967, No. 286 was enacted to delete a reference to the Circuit Court term, Representative Milton Caplan spoke in favor of the amendment, asserting that it “would permit a party equitably to come before the court and ask to reopen a judgment of foreclosure.” 12 H.R. Proc., Pt. 6, 1967 Sess., p. 2717. Speaking in favor of Public Acts 1975, No. 75-11, which clarified that a court could open a judgment of foreclosure prior to the passage of the law day, even if that occurred in a subsequent court term, Representative James T. Healey explained that the bill “states specifically that the power of the court to reopen the judgment and extend the law day exists up until such time as the time for redemption has passed; in other words, [until] a person’s rights have expired completely. It is a matter of equity and fairness . . . .” 18 H.R. Proc., Pt. 2, 1975 Sess., pp. 904-905.

Although the foregoing legislative remarks focus on the protection of the mortgagor’s equity of redemption rather than on the scope of a trial court’s authority to open a foreclosure judgment, they shed some light on the purpose of § 49-15 and on its intended impact. First, the legislative history of those amendments emphasizes the legislature’s understanding of foreclosure as an equitable proceeding and the consequent duty of the court to do justice to protect the rights of all the interested parties. Second, the remarks imply that the legislature’s purpose in barring courts from opening a judgment, after the mortgagor’s failure to redeem, was not to limit the mortgagee from further pursuit of its newly vested property rights but rather to prohibit the mortgagor from subsequent challenges to the enforceability of the mortgagee’s property rights.

Neither the text of § 49-15 nor the purpose that it was intended to serve requires us to construe the statute so broadly that it would preclude trial courts from exercising their equitable discretion to correct inadvertent omissions in mortgage foreclosure proceedings. The defendants have not alleged that the bank’s error caused them, in any way, to change their position to their detriment. The defendants were aware that a mortgage deed “remain[ed] unreleased on the land records . . . .” New Milford Savings Bank v. Jajer, supra, 44 Conn. App. 596. In these circumstances, if the defendants were to prevail on this issue, they would receive an unexpected and unjust windfall. Thus, as a matter of statutory construction, we conclude that § 49-15 does not deprive the trial court of jurisdiction to open a judgment of foreclosure to correct an inadvertent omission in a foreclosure complaint.

B

As support for its construction of § 49-15, the Appellate Court also relied on the proposition that “a mortgage cannot be foreclosed piecemeal . . . .” New Milford Savings Bank v. Jajer, supra, 44 Conn. App. 595. We reject so categorical a limitation on the rights of a mortgagee. We need not decide, in this case, whether to go as far as the Nebraska Supreme Court, which held that, even for an intentional omission of mortgaged property, “[t]he bank’s action against [one parcel] does not deny it the right to enforce its multiple security interests in further actions involving different parties and different parcels of land.” Dupuy v. Western State Bank, 221 Neb. 230, 237, 375 N.W.2d 909 (1985). At least in the circumstances of this case, in which the bank inadvertently omitted the third parcel from the original foreclosure action, we can discern no persuasive reason to preclude a subsequent foreclosure on the omitted parcel as a matter of law. On this record there is no basis for a claim that the bank waived its rights to such a foreclosure. We conclude that, consistently with its authority to exercise its equitable discretion in foreclosure proceedings, the trial court must be afforded the authority to open judgments on a case-by-case basis “in order that complete justice may be done.” Hartford Federal Savings & Loan Assn. v. Lenczyk, supra, 153 Conn. 463.

Our decision to permit partial foreclosures to be opened in appropriate circumstances is supported by public policy considerations. We agree with the Nebraska Supreme Court’s observation that an unconditional ban on partial foreclosures might well disserve all the interested parties because “requiring foreclosure upon all properties would needlessly involve the additional properties in litigation.” Dupuy v. Western State Bank, supra, 221 Neb. 237; see Michigan National Bank v. Martin, 19 Mich. App. 458, 463-64, 172 N.W.2d 920 (1969).

Furthermore, our conclusion is consistent with the law governing marshalling. Marshalling, an equitable principle, requires a mortgagee, in the case of a mortgage secured by several parcels of real estate, to foreclose first on those parcels that do not secure junior encumbrances. Restatement (Third), Property, Mortgages § 8.6, p. 633 (1997); see D. Caron, Connecticut Foreclosures: An Attorney’s Manual of Practice and Procedure (3d Ed. 1997) § 16.01A, p. 429; see also Bry-son v. Newtown Real Estate & Development Corp., 153 Conn. 267, 271-72, 216 A.2d 176 (1965). Implicit in the concept of marshalling is the understanding that a mortgagee does not waive an encumbrance on one of the parcels securing a mortgage by first foreclosing on other parcels. As long as junior lien creditors on all parcels securing the mortgage are made defendants in the foreclosure, so that they have an opportunity to request an apportionment if appropriate, partial foreclosure neither waives the mortgagee’s encumbrance nor impairs the rights of other interested parties. In this case, because all the junior lienors held security interests in all three parcels of land, no junior encumbrancer was deprived of the opportunity to petition for an apportionment.

Accordingly, we conclude that the Appellate Court improperly determined that § 49-15 deprived the trial court of jurisdiction, in the circumstances of this case, to open the judgment of foreclosure.

II

The Appellate Court further concluded that, even if the bank’s original foreclosure judgment in 1994 did not include the third parcel, the mortgage on that parcel had become unenforceable because of the bank’s failure to enforce its right to a deficiency judgment against the defendants. General Statutes § 49-14. Relying on § 49-1, the court stated that “a judgment of strict foreclosure extinguishes all rights of the foreclosing mortgagee on the underlying note, with the exception of rights enforceable through the use of the deficiency judgment procedure under General Statutes § 49-14. . . . [A]ffcer the judgment of foreclosure and the running of the law days, the [bank] is no longer able to foreclose that mortgage because the underlying note has been extinguished.” New Milford Savings Bank v. Jajer, supra, 47 Conn. App. 595-96. We disagree.

The defendants argue that, under § 49-1, foreclosure of a mortgage bars both in rem and in personam actions on a mortgage debt. They assert that the language of § 49-1 precludes further action of both types against any person liable for such payment over whom the court could assert in personam jurisdiction. We reject this construction of the statute.

We begin our analysis of § 49-1 by observing that, textually, the section does not address a foreclosing mortgagee’s right to enforce its interest in property that remains subject to an unreleased mortgage on the land records and that was not the subject of any previous foreclosure. Section 49-1 makes a mortgage foreclosure “a bar to any further action upon the mortgage debt, note or obligation against the person or persons who are liable for the payment thereof who are made parties to the foreclosure . . . .” (Emphasis added.)

This text poses a serious problem for the defendants. The statute addresses the mortgagee’s right to pursue personal remedies against the mortgagors with respect to their personal obligations on the underlying instrument of debt. It does not address the mortgagee’s right to pursue, instead, its in rem remedies against the mortgaged property. See Hodge v. Hodge, 178 Conn. 308, 313, 422 A.2d 280 (1979) (“an action in rem is an action brought to enforce or protect a pre-existing interest in particular property” [internal quotation marks omitted]). Whether the statute should be construed as impliedly barring an in rem remedy depends on whether, in expressly barring an in personam remedy, the statute has extinguished the mortgage debt itself.

As a general proposition, it is established law that the mortgage bears a close relationship to the underlying debt. The mortgage secures the debt. New England Savings Bank v. Bedford Realty Corp., 238 Conn. 745, 759, 680 A.2d 301 (1996); Restatement (Third), supra, § 1.1, p. 8. The mortgage follows the debt, in the sense that the assignment of the note evidencing the debt automatically carries with it the assignment of the mortgage. Waterbury Trust Co. v. Weisman, 94 Conn. 210, 218-19, 108 A. 550 (1919); Restatement (Third), supra, § 5.4, p. 380. The mortgage cannot survive the extinction of the debt. Hartford National Bank & Trust Co. v. Kotkin, 185 Conn. 579, 581, 441 A.2d 593 (1981).

It is also established law, however, that, upon the default of the mortgagor, the mortgagee has multiple remedies against both the mortgagor and the mortgaged property. “[T]he plaintiff is entitled to pursue its remedy at law on the notes, or to pursue its remedy in equity upon the mortgage, or to pursue both. A note and a mortgage given to secure it are separate instruments, executed for different purposes and, in this State, action for foreclosure of the mortgage and upon the note are regarded and treated, in practice, as separate and distinct causes of action, although both may be pursued in a foreclosure suit.” (Internal quotation marks omitted.) Hartford National Bank & Trust Co. v. Kotkin, supra, 185 Conn. 581; see Wendell Corp. Trustee v. Thurston, 239 Conn. 109, 116, 680 A.2d 1314 (1996); New England Savings Bank v. Bedford Realty Corp., supra, 238 Conn. 759. Under our cases, a mortgagee’s failure to pursue a deficiency judgment is not an election of remedies and does not, per se, extinguish the debt so as to preclude further equitable relief by way of foreclosure on the mortgaged property.

We are not persuaded that the legislature intended § 49-1, by barring further action “against the person or persons who are liable for the payment thereof,” to extinguish the defendants’ personal liability as well as their mortgage debt. Restatement (Third), supra, § 1.1, p. 8 (“[a] mortgage is enforceable whether or not any person is personally liable for that performance”). By barring action on the mortgage debt, § 49-1 proscribes a remedy, but does not eliminate the underlying debt. See, e.g., Markham v. Smith, 119 Conn. 355, 359, 176 A. 880 (1935) (“the statute of limitations does not destroy the debt but merely bars the remedy”). Because the statute does not speak to the continued existence of the mortgage debt, it does not supersede the bank’s continuing access to equitable foreclosure proceedings.

If the Appellate Court finds no merit in the remaining issues raised by the defendants in that court, the trial court, on remand, will need to consider the extent of the bank’s continuing mortgage interest in light of its past foreclosure of the mortgage with respect to the first and second parcels. If the bank decides to pursue an action for foreclosure, it must establish the amount of the mortgage debt. New England Savings Bank v. Bedford Realty Corp., supra, 238 Conn. 760 (“[i]npursuing the remedy of strict foreclosure [the mortgagee] or its assignee nevertheless will have to establish the amount of the debt that [the defendant] owes”). The bank must assume the burden of proving the amount by which that debt has been diminished by its acquisition of fee title to parcels one and two.

The judgment of the Appellate Court is reversed and the case is remanded to that court for its consideration of the remaining issues raised by the defendants’ appeal.

In this opinion the other justices concurred.

      General Statutes § 49-15 provides: “Any judgment foreclosing the title to real estate by strict foreclosure may, at the discretion of the court rendering the same, upon the written motion of any person having an interest therein, and for cause shown, be opened and modified, notwithstanding the limitation imposed by section 52-212a, upon such terms as to costs as the court deems reasonable; but no such judgment shall be opened after the title has become absolute in any encumbrancer.”
      General Statutes § 49-1 provides: “The foreclosure of a mortgage is a bar to any further action upon the mortgage debt, note or obligation against the person or persons who are liable for the payment thereof who are made parties to the foreclosure and also against any person or persons upon whom service of process to constitute an action in personam could have been made within this state at the commencement of the foreclosure; but the foreclosure is not a bar to any further action upon the mortgage debt, note or obligation as to any person liable for the payment thereof upon whom service of process to constitute an action in personam could not have been made within this state at the commencement of the foreclosure. The judgment in each such case shall state the names of all persons upon whom service of process has been made as herein provided.”

       The complaint named as defendants, in addition to Maurice and Maria Jajer, Sears, Roebuck & Co., the Waterbuiy Telephone Employees Federal Credit Union and the state department of revenue services, each of which had subordinate liens against the property. Those defendants, however, are not parties to the appeal. References to the defendants are to Maurice and Maria Jajer.

       The defendants conceded that the bank’s mistake was inadvertent. The bank’s inadvertence is shown, in part, by the fact that the foreclosure proceedings included an appraiser’s recertification of value that covered all three parcels.

       The defendants appealed from the order of the Bankruptcy Court to the United States District Court for the District of Connecticut, in Hartford. To our knowledge, that case, Jajer v. New Milford, Docket No. 3:95CV592 CFD, was still pending as of the date of this opinion.

       In its formal order modifying the stay, the Bankruptcy Court referred to its memorandum of decision but described its order somewhat differently. The order stated that “the stay afforded by 11 U.S.C. § 362, be, and hereby is, modified to permit the movant to proceed in state court to prosecute a supplemental action concerning a mortgage dated March 19, 1987, on property located at Merryall Road, New Milford, Connecticut.”

       Because the 1995 foreclosure judgment incorporated “other terms previously entered,” the judgment includes no terms concerning the amount of the mortgage debt. In their motion to open the judgment, the defendants did not raise any question about the court’s failure to consider whether and in what amount the earlier foreclosure affected the calculation of the mortgage debt. The court, Pickett, J., denied the defendants’ motion to open the judgment.

       See footnote 1 of this opinion.

       See footnote 1 of this opinion.

       In light of the limited question that we certified for appeal, we decline to consider the merits of the defendants’ allegations that, because of the inability of their trial counsel to appear at scheduled hearings, they were unfairly hampered in the presentation of their objections to the opening of the original foreclosure judgment.

       The Appellate Court noted that the defendants’ appeals had raised other issues that the court did not address.

       Both by common-law rule and by statute, a mortgagee in Connecticut is deemed to have taken legal title under the execution of a mortgage on real property. Conference Center, Ltd. v. TRC, 189 Conn. 212, 218, 455 A.2d 857 (1983); State v. Stonybrook, Inc., 149 Conn. 492, 496, 181 A.2d 601, cert. denied, 371 U.S. 185, 83 S. Ct. 265, 9 L. Ed. 2d 227 (1962). Nonetheless, the mortgagee’s legal title is a defeasible fee “subject to [an equitable] right of redemption which persists until it is extinguished by an action of foreclosure.” State v. Stonybrook, Inc., supra, 496. Even after the initiation of a foreclosure action, the mortgagee’s title does not become absolute until all eligible parties have failed to exercise their rights to redeem the property. City Lumber Co. of Bridgeport, Inc. v. Murphy, 120 Conn. 16, 19, 179 A. 339 (1935).

       The Appellate Court relied upon several Connecticut cases in concluding that a judgment of foreclosure cannot be opened, in any circumstances, after title has become absolute in the encumbrancer. We conclude, however, that the cases from this court are distinguishable, because they deal with extinguishment of the mortgagor's right of redemption after passage of the law day. See Varanelli v. Luddy, 130 Conn. 74, 77, 32 A.2d 61 (1943); Crane
        v. Loomis, 128 Conn. 697, 700, 25 A.2d 650 (1942). By contrast, in this case we consider whether a mortgagee may open a judgment of foreclosure in order to amend an inadvertent omission.
      In one case from the Appellate Court; Burritt Interfinancial Bancorporation v. Wood, 33 Conn. App. 401, 408, 635 A.2d 879 (1994); that court applied § 49-15 to preclude a plaintiff bank from opening a judgment of strict foreclosure. In that situation, however, the bank had learned of the defendant’s bankruptcy before the defendant’s law day had run and had failed to move to open the judgment to stop the law day from running. The facts of that case are far removed from the unintentional omission in this situation.

       The statute that became § 49-15 initially was enacted in 1923; Public Acts 1923, c. 145; and was revised in the General Statutes enacted in 1930; General Statutes (1930 Rev.) § 5084; and 1949. General Statutes (1949 Rev.) § 7196.

       Our decision in this case is limited to foreclosures involving an original mortgagor and mortgagee, and does not address the possible rights of third parties. See Stein v. Hillebrand, 240 Conn. 35, 44-47, 688 A.2d 1317 (1997) C'[T]he plaintiff, having knowingly acquiesced to the terms of the mortgage, is not merely a third party to that mortgage.”).

       The cases to the contrary, on which the Appellate Court relied; Matter of Silverman, 10 B.R. 734, 736 (S.D.N.Y. 1981), aff'd, 37 B.R. 200 (S.D.N.Y. 1982); Bankers Trust Co. v. G. H. Equities, Inc., 57 App. Div. 2d 601, 602, 394 N.Y.S.2d 30 (1977); Bodner v. Brickner, 29 App. Div. 2d 441, 446, 288 N.Y.S.2d 342 (1968); Dooly v. Eastman, 28 Wash. 564, 576, 68 P. 1039 (1902); all involve the rights of a mortgagee after the mortgagee intentionally elected not to foreclose on one of several parcels securing the mortgage.

       “Waiver is the intentional relinquishment of a known right.” (Internal quotation marks omitted.) Majernicek v. Hartford, Casualty Ins. Co., 240 Conn. 86, 96, 688 A.2d 1330 (1997); Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 251-52, 618 A.2d 506 (1992). It is also a question of fact. Majernicek v. Hartford Casualty Ins. Co., supra, 96. Because the bank’s omission of the third parcel from its original foreclosure complaint was unintentional, it did not constitute a knowing waiver of the mortgage on that parcel. We disagree, therefore, with the Appellate Court’s implied reliance on waiver to sustain its argument that partial foreclosures are improper. New Milford Savings Bank v. Jajer, supra, 44 Conn. App. 588.

       We do not address the problems that the bank might have faced if, instead of petitioning for an opening of the mortgage foreclosure, it had filed a separate cause of action to foreclose on the omitted third parcel. Possibly, such an action might have raised questions about the applicability of the law of claim preclusion or of issue preclusion. See, e.g., Connecticut Natural Gas Corp. v. Miller, 239 Conn. 313, 322-23, 684 A.2d 1173 (1996); Delahunty v. Massachusetts Mutual Life Ins. Co., 236 Conn. 582, 589, 674 A.2d 1290 (1996); Scalzo v. Danbury, 224 Conn. 124, 127, 617 A.2d 440 (1992); Duhaime v. American Reserve Life Ins. Co., 200 Conn. 360, 364, 511 A.2d 333 (1986).

       Caron writes: “Were the court to permit an equitable apportionment of the plaintiffs debt as part of a decree of strict foreclosure, each parcel could be redeemed, by either the owner or a subsequent encumbrancer, by payment of that portion of the debt apportioned to the parcel at issue. In essence, the blanket mortgage is treated as though it were a number of smaller mortgages on the separate parcels, and the foreclosure of each such smaller mortgage proceeds independently from others.” D. Caron, Connecticut Foreclosures: An Attorney’s Manual of Practice and Procedure (3d Ed. 1997) § 16.01A, p. 429.
      The procedural posture of this case is different from the situation described by Caron because the bank here, rather than seeking equitable apportionment, chose to foreclose the blanket mortgage in its entirety, albeit inadvertently omitting the description of one of the parcels securing the mortgage. It is, thus, the bank’s attempt to open the foreclosure judgment that has become the subject of this appeal. Caron’s description of equitable apportionment in the strict foreclosure context, however, reinforces our conclusion that the bank has not “waived” its mortgage on the third parcel by inadvertently omitting its description from the original foreclosure complaint.

       Section 8.6 of the Restatement (Third) of Property, Mortgages, provides: “[W]hen foreclosing a mortgage covering more than one parcel of real estate, upon the motion or application of the holder of a subordinate interest protected by this section, the mortgagee must proceed against the parcels in the following order:
      “(1) parcels on which no subordinate interests exist are foreclosed upon before parcels on which subordinate interests exist; and
      “(2) as among parcels on which subordinate interests exist, those with subordinate interests created more recently are foreclosed upon before those with subordinate interests created at a more remote time.” (Emphasis added.)

       The three creditors having junior encumbrances on the mortgaged property in this case — Sears, Roebuck & Co., Waterbury Telephone Employees Federal Credit Union, and the state department of revenue services— received notice of the foreclosure on parcels one and two. On May 12,1995, the trial court, entered a default for failure to appear against Sears, Roebuck & Co. On that same day, the trial court rendered a judgment of default for failure to plead against Waterbury Telephone Employees Federal Credit Union and the state department of revenue services. Although the state appeared, it disclaimed its interest under its lien on May 12, 1995.

       Another equitable principle in the strict foreclosure context points toward a similar conclusion. If “all the property covered by a mortgage has been sold in parcels to different purchasers at different times, upon foreclosure of the mortgage the parcels are liable in inverse order of alienation.” New England Mortgage Realty Co. v. Rossini, 121 Conn. 214, 216, 183 A. 744 (1936). Again, this procedure implies that a mortgagor does not waive a mortgage on omitted parcels by foreclosing on only some of the land securing the mortgage.

       Even if the liens of the junior creditors had been limited to the third parcel, they chose not to assert their lien rights at any time during these proceedings.

       General Statutes § 49-14 provides in relevant part: “(a) At any time within thirty days after the time limited for redemption has expired, any party to a mortgage foreclosure may file a motion seeking a deficiency judgment. Such motion shall be placed on the short calendar for an evidentiary hearing. Such hearing shall be held not less than fifteen days following the filing of the motion, except as the court may otherwise order. At such hearing the court shall hear the evidence, establish a valuation for the mortgaged property and shall render judgment for the plaintiff for the difference, if any, between such valuation and the plaintiffs claim. The plaintiff in any further action upon the debt, note or obligation, shall recover only the amount of such judgment. . . .”

       The legislative history of the 1957 amendment to the statute, Public Acts 1957, No. 443, reinforces our conclusion that the purpose of § 49-1 is to bar only further personal liability on a mortgage note following foreclosure of the mortgage. Speaking in support of Senate Bill No. 834, which added the language limiting the application of § 49-1 to individuals subject to service of process in this state, Senator John Filer stated: “[A] foreclosure of a mortgage bars further action on the note unless the person is liable for payment or made party to the foreclosure. We now add that the bar exists only if service of process could have been made on such persons in this State.” (Emphasis added.) 7 S. Proc., Pt. 3, 1957 Sess., p. 1842, remarks of Senator Filer. In the General Law Committee, as well, Robert Hildengay, testifying in favor of Senate Bill No. 834, described it as a limitation on personal liability following foreclosure. Prefacing his remarks, he stated: “Mortgagees, under our law, have alternative rights. They may bring action on the note [as well as foreclosure]. . . .” Conn. Joint Standing Committee Hearings, General Law Committee, Pt. 1, 1957 Sess., p. 161, remarks of Hildengay.

       The parties dispute the meaning of Swift v. Edson, 5 Conn. 532 (1825), an early case from this court. The bank asserts that Swift stands for the proposition that as long as a valid mortgage exists, the underlying debt is not extinguished and thus can be pursued in a second foreclosure. The defendants attempt to distinguish Swift, arguing that that case involved a second mortgagee who had not been named as aparty in the first proceeding. Because, however, at the time of Sv;ift, neither § 49-1 nor § 49-15 had been enacted, that case does not inform our decision in this case.

       The bank concedes in its brief that it can no longer recover from the defendants personally. All that is at issue in this appeal is whether the bank may foreclose on the third parcel.

       Because the bank’s inadvertent omission of the third parcel from its foreclosure complaint did not extinguish the underlying debt, the mortgage on the third parcel retains continued vitality. Accordingly, we do not address the defendants’ argument that the bank’s mortgage on the third parcel may be extinguished in accordance with General Statutes § 49-13, entitled “Petition for discharge of mortgages or of ineffective attachment, lis pendens or lien. Damages.”

       The text of § 49-14 (a), dealing with deficiency judgments, is set out in footnote 22 of this opinion. In a strict foreclosure action, the purpose of the hearing provided in § 49-14 (a) is to determine the fair market value of the property. New England Savings Bank v. Lopez, 227 Conn. 270, 278, 630 A.2d 1010 (1993); Fairfield Plumbing & Heating Supply Corp. v. Kosa, 220 Conn. 643, 646 n. 8, 600 A.2d 1 (1991). “This section applies only to deficiency judgments in strict foreclosure actions.” Id.


source: Caselaw Access Project

author: NORCOTT, J.

license: Public Domain

text:
    PETER-MICHAEL, INC. v. SEA SHELL ASSOCIATES ET AL.
    (SC 15789)
    Callahan, C. J., and Borden, Berdon, Norcott, Katz, Palmer and McDonald, Js.
    Argued January 13
    officially released March 31, 1998

      Max F. Brunswick, for the appellant (plaintiff).

      Richard E. Minton, for the appellee (named defendant).

      Eric R. Gaynor, for the appellee (defendant Sand Dollar Development Group, LLC).
   Opinion

NORCOTT, J.

The dispositive issue in this appeal is whether the plaintiff, Peter-Michael, Inc., has stated a legally sufficient cause of action against the defendants, Sea Shell Associates (Sea Shell) and Sand Dollar Development Group, LLC (Sand Dollar), for breach of contract arising out of the defendants’ alleged failure to offer the plaintiff a right of first refusal upon the sale of certain premises leased by the plaintiff. The defendants successfully moved to strike the plaintiffs complaint on the ground that the plaintiffs contractual right of first refusal did not carry over to its current holdover month-to-month tenancy. We reverse the judgment of the trial court striking the plaintiffs complaint.

“The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaints ... to state a claim upon which relief can be granted.” (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). “In an appeal from a judgment granting amotion to strike, we operate in accordance with well established principles.” (Internal quotation marks omitted.) Skuzinski v. Bouchard Fuels, Inc., 240 Conn. 694, 696, 694 A.2d 788 (1997). “[W]e must take as true the facts alleged in the plaintiffs complaint and must construe the complaint in the manner most favorable to sustaining its legal sufficiency. Sassone v. Lepore, 226 Conn. 773, 780, 629 A.2d 357 (1993); Michaud v. Waw-ruck, 209 Conn. 407, 408, 551 A.2d 738 (1988). Waters v. Autuori, 236 Conn. 820, 822, 676 A.2d 357 (1996).” (Internal quotation marks omitted.) Parsons v. United Technologies Corp., 243 Conn. 66, 68, 700 A.2d 655 (1997). “If facts provable in the complaint would support a cause of action, the motion to strike must be denied.” (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., supra, 580.

We assume as true the following facts as alleged in the plaintiffs complaint. On March 31,1981, the plaintiff entered into a written lease agreement with Hadknight Associates, the predecessor in title to Sea Shell, for certain real property located in Cheshire, consisting of a movie theater and six stores. The lease agreement defined the term of the lease as a period of five years, beginning April 1,1981, and ending March 31,1986. The lease provided that the plaintiff had the option to extend the term of the lease for an additional five year period. If the plaintiff remained in possession of the premises after that time, the lessor could elect to treat the tenancy as a month-to-month tenancy. Specifically, paragraph twenty, which governed the month-to-month tenancy, provides in relevant part that “[i]n the event that the Tenant shall remain in the demised premises after the expiration of the term of this lease without having executed a new written lease with the Landlord, such holding over shall not constitute a renewal or extension of this lease. . . . [T]he Landlord may elect, at its option, to construe such holding over as a tenancy from month to month, subject to all the terms and conditions of this lease, except as to duration thereof . . . .” (Emphasis added.) The lease also contained a provision that, upon receipt by the lessor of a bona fide offer from a third party, the plaintiff had a right of first refusal to purchase the property on the same terms and conditions. Specifically, paragraph A-6 of the lease addendum provides in relevant part that “[i]n the event that, at any time during the lease term, Landlord shall receive a bona fide offer from any person to purchase the [leased] premises . . . Landlord shall give Tenant notice of the price and terms of such an offer and of the intention of the Landlord to accept the same. Tenant shall have the right for 15 days thereafter to purchase the leased premises in its own name . . . for the purchase price and on the terms specified in Landlord’s notice. . . .” (Emphasis added.) During the first five year term, Had-knight Associates sold the premises to Sea Shell. The plaintiff exercised its option to extend the lease for an additional five year period from April 1, 1986, through March 31, 1991. Upon expiration of this second five year term in 1991, Sea Shell elected to treat the plaintiff as a month-to-month tenant in accordance with the terms of the lease. On March 29, 1996, Sea Shell sold the property to Sand Dollar. The plaintiff was neither notified of the terms of Sand Dollar’s offer nor given an opportunity to purchase the property.

Thereafter, the plaintiff brought this complaint seeking specific performance of the contract and damages for breach of the contract. The defendants moved to strike the plaintiffs complaint for failure to state a cause of action upon which relief could be granted asserting that, as a matter of law, the right of first refusal was limited to the additional five year lease term, which ended on March 31, 1991. Accordingly, the defendants maintained that the plaintiff did not have a right of first refusal when Sea Shell sold the property to Sand Dollar in 1996. The trial court agreed and granted the defendants’ motions to strike the plaintiffs complaint.

The trial court focused exclusively on paragraph twenty of the lease and paragraph A-6 of the lease addendum in its analysis of whether the plaintiffs right of first refusal existed at the time that Sea Shell had sold the property to Sand Dollar in 1996. The court reasoned that paragraph A-6 “expressly conditioned” the plaintiffs right of first refusal “upon the landlord’s receiving a bona fide offer to purchase ‘at any time during the lease term.’’ ” (Emphasis added.) The court then determined that the “lease term” was limited to the original five year period and the extension of the lease by the plaintiff for an additional five year term, and thus expired in 1991.

The trial court then examined paragraph twenty to determine the status of the month-to-month tenancy. In reconciling paragraphs A-6 and twenty, the court construed the word “term” used in paragraph A-6 as synonymous with the word “duration” used in paragraph twenty. On the basis of this construction, the court reasoned that because the “offer of purchase did not occur until the termination of the lease and its replacement by a holdover month-to-month tenancy that did not incorporate the duration of the original lease into its terms and conditions, the plaintiff did not have a right of first refusal with respect to any offer of purchase made after March 31, 1991.” In addition, the trial court noted that “a number of other courts have suggested that a purchase option or right of first refusal does not survive the expiration of the formal lease term and conversion into a holdover month-to-month tenancy.” This appeal followed.

The plaintiff argues that the trial court improperly granted the defendants’ motion to strike because a factual determination should have been made as to whether the parties intended the right of first refusal to extend to the month-to-month tenancy. The plaintiff claims that the month-to-month tenancy reasonably could be construed as an extension of the lease because it was subject to all the terms and conditions of the lease. The plaintiff asserts that the text of the terms and conditions that applied to the month-to-month tenancy supports a conclusion that the holdover period constituted an extension of the lease, or at the very least, constitutes evidence that the lease is ambiguous. Under the plaintiffs construction, the complaint states a cause of action because the March 31,1996 sale of the property occurred within the “lease term” and, accordingly, was subject to the plaintiffs right of first refusal.

The defendants argue that the trial court properly granted the motion to strike because the “clear and unambiguous language” of the lease establishes that the “lease term” does not encompass the holdover tenancy and, accordingly, the plaintiffs right of first refusal expired in 1991. The defendants contend that, despite the continuation of the terms and conditions of the lease, the month-to-month tenancy cannot be construed as an extension falling within the “lease term,” because paragraph twenty expressly states that “such holding over shall not constitute a renewal or extension of this lease . . . .”

In construing a written lease, which constitutes a written contract, “three elementary principles must be kept constantly in mind: (1) The intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible. Perkins v. Eagle Lock Co., 118 Conn. 658, 663, 174 A. 77 [1934], Ingalls v. Roger Smith Hotels Corporation, 143 Conn. 1, 6, 118 A.2d 463 (1955); Lonergan v. Connecticut Food Store, Inc., 168 Conn. 122, 128, 357 A.2d 910 (1975); Collins v. Sears, Roebuck & Co., 164 Conn. 369, 373-74, 321 A.2d 444 (1973); Perruccio v. Allen, 156 Conn. 282, 285, 240 A.2d 912 (1968).” (Internal quotation marks omitted.) Central New Haven Development Corp. v. La Crepe, Inc., 177 Conn. 212, 214-15, 413 A.2d 840 (1979).

We recognize that “ ‘[t]he question whether an option to purchase contained in a lease can be exercised by a tenant during an additional term provided for in the lease, has been productive of much difficulty, and has produced many decisions which cannot be reconciled.’ ” Ardito v. Howell, 29 Del. Ch. 467, 471, 51 A.2d 859 (1947). “Language in leases making the option applicable ‘during the term’ or ‘during the existence’ of the lease is not helpful for this purpose because ‘term’ may be used with reference to both the original term and to extensions and renewals.” 2 M. Friedman, Leases (4th Ed. 1997) § 15.4, p. 973. “ ‘It seems to be generally agreed that it depends upon the intention of the parties to be gathered from the lease itself.’ ” Ardito v. Howell, supra, 471. “Intent is a question of fact.” Costello v. Costello, 139 Conn. 690, 695, 96 A.2d 755 (1953); see Didriksen v. Havens, 136 Conn. 41, 48, 68 A.2d 163 (1949). “[I]ntention is to be determined from the language used, the circumstances, the motives of the parties and the purposes which they sought to accomplish.” Klein v. Chatfield, 166 Conn. 76, 80, 347 A.2d 58 (1974). A determination of contractual intent ordinarily presents a question of fact for the ultimate fact finder, although where the language is clear and unambiguous, it becomes a question of law for the court. Water & Way Properties v. Colt’s Mfg. Co., 230 Conn. 660, 667, 646 A.2d 143 (1994).

Mindful of these principles, we examine the relevant lease provisions in the present case. Paragraph twenty provides in pertinent part that the month-to-month tenancy is “subject to all the terms and conditions of this lease, except as to duration thereof . . . .” Paragraph A-6 provides that the right of first refusal is triggered by a bona fide offer made “at any time during the lease term . . . .” Although paragraph twenty states that the holdover tenancy does not constitute an extension, it also states that during this period the plaintiff is subject to all the terms and conditions of the lease, including the obligations to pay rent, make necessary repairs and replacements, and maintain liability and property insurance.

The defendants argue that had the parties intended that the holdover tenancy be an extension of the lease that incorporated the right of first refusal, they could have so drafted. They point to the text of paragraph A-1 as support for this proposition. Paragraph A-l, which the defendants concede applies to the holdover period, states that the tenant shall pay as additional rent 50 percent of any increase in real estate taxes and fire and extended coverage insurance “[djuring the term of this lease and any extension or renewal period . . . .” (Emphasis added.) We are unpersuaded.

The terms of a lease may not be conclusive as to whether an extension exists and in that case, “disregarding labels and relying on the expectations of the parties ... is the proper approach.” 49 Am. Jur. 2d 156, Landlord and Tenant § 143 (1995); see Carrano v. Shoor, 118 Conn. 86, 93, 171 A. 17 (1934); Blanch v. Kimland Realty Co., 122 Conn. 317, 318-19, 189 A. 176 (1937) (provision may be construed as extension of lease although it is called renewal). The text of paragraph A-l, to which the defendants direct our attention, does not necessarily support their argument that the month-to-month tenancy was not an extension. By its own terms, paragraph A-l applies to an extension of the lease, and arguably was intended to apply to the holdover period.

We turn next to the text of the other terms and conditions contained in the lease to ascertain the language used to indicate their possible applicability to the holdover tenancy. Unlike paragraph A-l, paragraphs A-4, A-5 and A-8 do not contain the phrase “any extension or renewal period” nor were they consistently drafted, yet all were susceptible of an intention by both parties to apply to the month-to-month tenancy. Paragraph A-4 provides that the “[tjenant will, at all times during the term” provide liability insurance for the leased premises. (Emphasis added.) Paragraph A-5 provides that the tenant must maintain fire insurance “[f]or as long as this Lease shall continue in effect. . . .’’(Emphasis added.) Paragraph A-8 provides that the landlord will repair if the premises are partially damaged by fire “during said term . . . .” (Emphasis added.) Our review of the language of these other provisions that the defendants admit might apply to the holdover tenancy leads us to conclude that the language is not definitive.

Finally, we are unpersuaded by the case law cited by the defendants. Although these cases do conclude that a right of first refusal does not extend to a holdover tenancy, in general they were not decided in the same procedural posture as was the present case in which the sole issue was whether the complaint stated a legally sufficient cause of action. The only exception is Andreula v. Slovak Gymnastic Union Sokol Assembly No. 223, 140 N.J. Eq. 171, 53 A.2d 191 (1947), which was decided in a procedural posture similar to the present case without a determination of the parties’ intent. In Andreula, the Court of Errors and Appeals of New Jersey affirmed the dismissal of the plaintiffs action seeking the enforcement of a right of first refusal. Id., 174. The court reasoned that the purchase option could not be enforced because “[t]here [was] no criterion or standard [in the lease] establishing] by which the price may be determined with certainty . . . .” Id., 173. As further justification for the dismissal of the complaint, the court stated that as a matter of law, “[a]n option to purchase contained in a written lease cannot be exercised after the expiration of the written lease by a tenant holding over since it is a collateral contract, independent of the lease.” Id., 174. That conclusion, however, is inconsistent with Didriksen v. Havens, supra, 136 Conn. 41, in which this court considered whether an option to purchase continued as an extension of the lease. The court recognized “that the weight of authority and the Connecticut rule favor the continuance of the option to purchase”; id., 45; and concluded that the option to purchase was an integral part of a lease, inseparably connected to the lease, and supported by “ ‘common and indivisible consideration.’ ” Id.

In view of the equivocal language of the provisions applicable to the month-to-month tenancy and the absence of definitive language excluding the right of first refusal during the holdover tenancy, we are persuaded that the lease is ambiguous with respect to the parties’ intent to limit the right of first refusal to the five year lease periods. “Bearing in mind our responsibility to construe the complaint ‘in the manner most favorable to sustaining its legal sufficiency’ Warner v. Konover, 210 Conn. 150, 156, 553 A.2d 1138 (1989); we conclude that the plaintiffs allegations that the defendants failed to provide it with a right of first refusal state a cause of action that is legally sufficient to have survived a motion to strike. See Gressitt v. Anderson, 187 Md. 586, 591-92, 51 A.2d 159 (1947) (complaint alleging option to purchase carried over to holdover tenancy not demurrable).

The judgment is reversed and the case is remanded for further proceedings according to law.

In this opinion the other justices concurred.

       The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023, now Practice Book (1998 Rev.) § 65-1, and General Statutes § 51-199 (c).

       The addendum was executed as part of the lease. References in this opinion to certain paragraphs of the addendum are prefaced by the letter “A.”

       Count one of the complaint sought specific performance of the contract by allowing the plaintiff to purchase the property from Sand Dollar for $75,000, the amount that Sand Dollar had paid to Sea Shell for the property. Count two sought damages that the plaintiff had incurred in maintaining possession of the premises by defending against a summary process action brought by Sand Dollar. Count three alleged a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq.

       The trial court struck all three counts of the complaint, concluding that the determination of whether the plaintiff had a right of first refusal was “the linchpin of this case” and that the other counts were derivative.

       An option to purchase ordinarily grants the tenant an absolute right to purchase leased property. A right of first refusal, also known as a preemptive option, “confers upon the tenant a preferential right of purchase if the landlord decides to sell the leased property.” R. Schoshinski, American Law of Landlord and Tenant (1980) § 9:9, p. 620. “ ‘A right of pre-emption is a right to buy before or ahead of others . . . but. . . only if the seller decides to sen.’ ” Hare v. McClellan, 234 Conn. 581, 588-89, 662 A.2d 1242 (1995).

        White Castle System, Inc. v. Blohm, 807 F.2d 313 (2d Cir. 1986) (appeal from trial); Douglass v. Jones, 422 So. 2d 352 (Fla. App. 1982) (appeal from judgment ordering specific performance); Carroll v. Daigle, 123 N.H. 495, 463 A.2d 885 (1983) (appeal from declaratory judgment); Gulf Oil Corp. v. Buram Realty Co., 11 N.Y.2d 223, 182 N.E.2d 608, 228 N.Y.S.2d 225 (1962) (appeal from summary judgment); Power Test Petroleum Distributors, Inc. v. Baker-Tripi Realty Corp., 190 App. Div. 2d 845, 594 N.Y.S.2d 266 (1993) (appeal from trial); Vernon v. Kennedy, 50 N.C. App. 302, 273 S.E.2d 31 (1981) (appeal from summary judgment); Grisham v. Lowery, 621 S.W.2d 745 (Tenn. App. 1981) (appeal from trial).

       The doctrine that the lease and the option to purchase constitute two separate contracts is “contrary to the great weight of authority in the United States . . . .” (Citations omitted.) Shuford Development Co. v. Chrysler Corp., 449 F.2d 429, 434 (5th Cir. 1971).

       Although we conclude that the plaintiff has pleaded a cause of action, we express no opinion as to the ultimate question of whether the defendants breached the lease by not affording the plaintiff a right of first refusal to purchase the property in 1996. See Parsons v. United Technologies Corp., supra, 243 Conn. 86.


author: CALLAHAN, C. J.

text:
    SOUTHEASTERN CONNECTICUT REGIONAL RESOURCES RECOVERY AUTHORITY ET AL. v. DEPARTMENT OF PUBLIC UTILITY CONTROL ET AL.
    (SC 15666)
    Callahan, C. J., and Borden, Berdon, Norcott and Palmer, Js.
    Argued January 21
    officially released March 31, 1998

      Philip M. Small, with whom were Jeffery D. Cochran and, on the brief, Brian T. Henebry, for the appellant (defendant Connecticut Light and Power Company).

      William H. Bright, Jr., with whom were William H. Narwold, Roger E. Koontz and, on the brief, Robert E. Wright and Moyahoena N. Ogilvie, for the appellees (plaintiffs).
   Opinion

CALLAHAN, C. J.

This is an appeal from a judgment of the trial court sustaining the plaintiffs’ appeal from a ruling by the named defendant, the department of public utility control (department), issued in response to a request for resolution of a payment dispute by the defendant Connecticut Light and Power Company, and from the department’s ruling on the petition for a declaratory ruling by the plaintiffs. The sole issue on appeal is whether the defendant is obligated to pay the contractually established “Average Municipal Retail Rate” for electrical output produced by the plaintiffs that is in excess of 13.85 megawatts (MW). We conclude that the defendant is so obligated.

The relevant facts are undisputed. The defendant is an electric company as defined by General Statutes § 16-1 (a) (8) that is required to purchase electricity from the plaintiffs. The plaintiffs are the owners and operators of a resource recovery facility (facility), as defined by General Statutes § 22a-260 (ll), located in Preston, which produces electric energy from solid waste.

Prior to the construction of the facility, the plaintiffs and the defendant entered into an electrical energy purchase agreement (agreement) whereby the defendant agreed to purchase the entire output of electrical energy from the plaintiffs’ facility. The parties entered into the agreement pursuant to General Statutes (Rev. to 1989) § 16-243e. Section 16-243e requires an electric company that purchases electricity generated by a resource recovery facility owned or operated by or for the benefit of a municipality to enter into a contract, with a minimum duration of twenty years, in which the electric company agrees to purchase the electricity generated by the facility “at the same rate that the electric company charges the municipality or municipalities for electricity,” referred to generically as the “municipal rate.”

This case is the second appeal to this court in the continuing saga between these parties concerning this agreement and the meaning of § 16-243e. By way of background, in 1987, the parties entered into the statutorily mandated agreement and obtained approval of the agreement from the department. Southeastern Connecticut Regional Resources Recovery Authority, Department of Public Utility Control, Docket No. 87-06-12 (October 6, 1987). In its ruling approving the agreement, the department mandated that the defendant pay the municipal rate for the facility’s entire output of electricity. Id. The defendant appealed to the Superior Court, challenging the constitutionality of § 16-243e and the department’s interpretation of that statute. Upon consideration of a reserved question from the trial court, we concluded that the defendant was obligated by § 16-243e to pay the municipal rate for only that portion of the electrical output attributable to waste that is obtained by the facility from municipalities within the defendant’s franchise area (franchise waste), i.e., those towns in which it serves customers. Connecticut Light & Power Co. v. Dept. of Public Utility Control, 210 Conn. 349, 357-58, 554 A.2d 1089 (1989). We reached that conclusion because we determined that § 16-243e requires an electric company that pinchases electricity from a resource recovery facility that is owned or operated by or for the benefit of a municipality or municipalities to pay the same rate that the electric company charges the municipalities for electricity. Id. If a municipality is not within the electric company’s franchise area, then, a fortiori, the electric company does not charge that municipality for electricity. Consequently, we concluded that § 16-243e is not applicable to electrical output that is attributable to nonfranchise waste. Id.

We further concluded, however, that an electric company is required to purchase the entire electrical output of a resource recovery facility. Id., 358. Accordingly, it was necessary at that time to ascertain the applicable rate payable for electrical output attributable to non-franchise waste. The facility, in addition to being a resource recovery facility, is also a private power producer within the meaning of General Statutes § 16-243b (a) (3). General Statutes § 16-243a (b) requires an electric company to purchase the entire output of a private power producer. Section 16-243a (c) provides that an electric company need pay only its “avoided costs” rate for energy purchased from a private power producer. We interpreted the foregoing statutes to require that the defendant: (1) purchase the entire electrical output of the facility; (2) pay the municipal rate as established in § 16-243e for the electrical output attributable to franchise waste; and (3) pay the avoided cost rate of § 16-243a (c) (2) for electrical output attributable to nonfranchise waste. Connecticut Light & Power Co. v. Dept. of Public Utility Control, supra, 210 Conn. 358.

The plaintiffs’ facility became operational in January, 1992, and began producing and providing electricity pursuant to the agreement between the parties at that time. The agreement incorporated by reference a description of the facility that included specifications, which stated that the facility’s electrical output would be approximately 13.85 MW based on approximately 600 tons of waste processed per day. When the plaintiffs notified the defendant that the facility was com-píete and ready to begin supplying electricity, they also gave notice that its output would be 13.91 MW and that the energy output and waste throughput were expected to increase owing to operational improvements. Upon receiving that notice, the defendant acknowledged that “all Prerequisites for Purchase under the Contract were satisfied on [January 5, 1992].”

Soon after the facility became operational, it began to generate more than an average of 13.85 MW on an hourly basis. It did not, however, exceed 13.85 MW on a monthly average until significantly later. The defendant does not dispute that it has a statutory obligation, incorporated into the agreement, to purchase all of the facility’s energy output, even that above the 13.85 MW level. It does challenge, however, its obligation to pay the contract price, i.e., the municipal rate, for production in excess of 13.85 MW. In January, 1993, the defendant filed with the department a request for resolution of a payment dispute. In its request, the defendant argued that the output in excess of 13.85 MW, measured on an hourly basis, was not covered by the agreement and, therefore, that it was obligated to pay only the significantly lower “current avoided costs” rate for any electrical output in excess of that figure. The plaintiffs subsequently petitioned the department for a declaratory ruling that the municipal rate was applicable to the electrical output of its facility in excess of 13.85 MW.

In response to these requests, the department ruled that the defendant was not obligated to pay the municipal rate, as specified in the agreement, for energy output in excess of 13.85 MW, calculated on the basis of a monthly average. It, therefore, resolved the payment dispute in favor of the defendant and denied the plaintiffs’ petition. Its conclusion was based on the fact that a description of the facility indicating an output of 13.85 MW, a specification at the time the agreement was ratified, was incorporated into the agreement by reference; see footnote 13 of this opinion; creating a limitation on the maximum output for which the defendant was hable to pay the municipal rate. Additionally, the department noted that its approval of the agreement had been contingent on the facility being built as specified, which included a limitation on output of 13.85 MW. The plaintiffs appealed to the Superior Court pursuant to General Statutes §§ 4-176 and 4-183. The court, exercising plenary review over the interpretation of the agreement

and the relevant statute, sustained the plaintiffs’ appeal. It concluded that § 16-243e provides for the exclusive use of the municipal rate for the purchase by an electric company from a resource recovery facility of electrical output attributable to franchise waste and that the agreement unambiguously calls for payment of the municipal rate for the entire output so attributed. The defendant appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023, now Practice Book (1998 Rev.) § 65-1, and General Statutes § 51-199 (c). We affirm the judgment of the trial court.

The defendant urges this court to defer to the department’s decision because, it argues, the resolution of the issue presented requires an interpretation of ambiguous contract terms, which presents a question of fact that is properly resolved by the department. The plaintiffs respond that this case presents pure questions of law based on the construction of a statute and an unambiguous contract. They argue that our review is, therefore, plenary and that no deference is owed to the department’s decision. We agree with the plaintiffs.

The dispute regarding the proper standard of review stems from the fact that resolution of the issue presented involves both an interpretation of a statute, § 16-243e, and of the agreement between the parties. Statutory construction is generally a question of law. Coley v. Camden Associates, Inc., 243 Conn. 311, 318, 702 A.2d 1180 (1997). “Although coruts ordinarily defer to an agency’s interpretation of statutory text, where, as in this case, the construction of the statute . . . has not previously been subjected to judicial scrutiny [or to] ... a governmental agency’s time-tested interpretation . . . that construction constitutes a question of law for which deference is not warranted.” (Citation omitted; internal quotation marks omitted.) Burinskas v. Dept. of Social Services, 240 Conn. 141, 147, 691 A.2d 586 (1997); see also Connecticut Light & Power Co. v. Texas-Ohio Power, Inc., 243 Conn. 635, 642, 708 A.2d 202 (1998). Although § 16-243e has been subjected to judicial review, this particular aspect has not; nor has the department’s interpretation of the statute been the object of time-tested agency interpretation. The interpretation of § 16-243e is, therefore, a pure question of law to which no deference to the department’s interpretation is owed.

“Although ordinarily the question of contract interpretation, being a question of the parties’ intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.” (Citations omitted; internal quotation marks omitted.) Levine v. Massey, 232 Conn. 272, 277-78, 654 A.2d 737 (1995). For the reasons discussed below, we conclude that the agreement is not ambiguous and, thus, judicial review of both the statute and the contract is plenary. The trial court, therefore, employed the proper standard of review. Furthermore, when this court is “called upon to review the legal conclusions of the trial court. . . our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record.” (Internal quotation marks omitted.) Rich-Taubman Associates v. Commissioner of Revenue Services, 236 Conn. 613, 618, 674 A.2d 805 (1996) .

The defendant maintains that this is an ambiguous contract that requires a factual determination of the intent of the parties in order to construe its effect. In construing the meaning of the parties’ agreement, we are guided by well established rules. “A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract. . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity .... Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms. ... 24 Leggett Street Ltd. Partnership v. Beacon Industries, Inc., 239 Conn. 284, 295, 685 A.2d 305 (1996).” (Emphasis added; internal quotation marks omitted.) Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686-87, 697 A.2d 1137 (1997) .

The defendant argues that its interpretation of the intent of the parties reasonably follows from the supposed ambiguity in two provisions of the agreement. First, the description of the facility, incorporated into the agreement by reference, lists certain specifications of the facility, including a statement that “[t]he Facility will have a nameplate capacity of approximately 600 tons per day of solid waste (5000 BTU/LB. HHV). The turbine/generator will have nameplate capacity, net of station use, of approximately 13.85 MW.” (Emphasis added.) The defendant argues that this language establishes that the facility will have a maximum output of 13.85 MW. It claims that any output above that amount is excess not contemplated by the agreement and not required to be purchased at the municipal rate.

The second provision of the contract relevant to the defendant’s argument is § 11, entitled “Rates for Purchase.” Subsection (b) of that section provides that “for the twenty (20) years immediately following the In-Service Date, all electricity delivered by Seller to Buyer at the point of interconnection pursuant to the terms of the Agreement, shall be purchased by Buyer at the Average Municipal Retail Rate . . . .” The defendant argues that this provision requires it to pay the municipal rate only for energy delivered “pursuant to the terms of this agreement.” Because, the defendant contends, any output in excess of 13.85 MW is not delivered “pursuant to the terms of this Agreement,” it follows that the purchase price is not governed by the agreement. We are not persuaded.

The defendant’s interpretation of the agreement cannot withstand review because the ambiguity it alleges does not emanate from the language of the agreement, but from the defendant’s subjective interpretation of that language. There is no indication in the contract that the phrase “approximately 13.85 MW” was intended to represent a maximum output figure. To the contrary, the contract as a whole demonstrates that the parties did not intend 13.85 MW to represent a limitation on output or that output in excess of 13.85 MW would be sold at any rate other than the municipal rate. Most significantly, the agreement clearly contemplates the purchase and sale of electricity in excess of the 13.85 MW approximated in the facility description. Section 10 of the agreement, entitled “Obligation to Sell and to Purchase,” requires that the “Seller shall deliver to Buyer and Buyer shall purchase from Seller the entire net electric output of the Facility for the Term as reduced by electrical losses as described in Section 6(b) of this Agreement.” If, as the defendant argues, the municipal rate is not applicable, there is no alternative rate provided for electricity purchased in excess of 13.85 MW.

The defendant argues, however, that the absence of a specific rate for excess output implies that the plaintiffs agreed to accept the avoided cost rate, rather than the municipal rate, for output not covered by the contract. The defendant’s argument that the avoided cost rate is the applicable rate for output in excess of 13.85 MW relies on our interpretation of § 16-243e in Connecticut Light & Power Co. v. Dept. of Public Utility Control, supra, 210 Conn. 355, in which we acknowledged that the plaintiffs facility is a private power producer as defined by § 16-243b (a) (3), as well as a resource recovery facility, and that an electric company is obligated to purchase energy from private power producers only at the avoided cost rate pursuant to § 16-243a (c) (2). This analysis misconstrues our decision. In Connecticut Light & Power Co., we concluded that §§ 16-243a and 16-243b, governing private power producers, may apply to resource recovery facilities. They are applicable, however, only when § 16-243e, which governs resource recovery facilities, is not applicable because the energy output is attributable to nonfranchise waste. Id., 357. The defendant incorrectly assumes that the avoided cost rate of § 16-243a (c) (2) automatically applies to any output arguably not governed by the agreement. The only statutory rate applicable to output attributable to franchise waste, however, is the municipal rate contained in § 16-243e. Id. Moreover, even if we assume, arguendo, that the plaintiffs can waive the municipal rate mandated by § 16-243e for output attributable to franchise waste, there is no indication here that the plaintiffs agreed to accept a lower rate.

In addition to the absence of an alternative rate for excess output, the agreement also does not contain a definitive limitation on output in the body of the agreement. It includes only an approximation of output in specifications attached as an exhibit to the agreement. Moreover, the agreement contains no mechanism by which to measure the alleged limitation on output. There is no indication in the agreement whether that purported limit of 13.85 MW should be measured on an hourly basis, or on a daily, monthly or annual average. Finally, the defendant’s interpretation of the facility agreement ignores the use of the word “approximately” and unilaterally rewrites the provision as if it stated “a maximum of 13.85 MW.” We will not, however, torture the language of the contract to create an ambiguity where none exists. Lawson v. Whitey’s Frame Shop, supra, 241 Conn. 686-87. An ambiguity must be apparent from the document, not from “one party’s subjective perception of the terms.” Id. The term “approximately” “must be accorded its common, natural, and ordinary meaning and usage . . . .” Id. We cannot reconcile the defendant’s claim that 13.85 MW is an absolute maximum with the use of the word “approximately.” In the absence of any rate other than the municipal rate or of specific limitations on output in the contract, we cannot conclude that the parties intended to create a limitation on output and an alternative rate for the output of the plaintiffs’ facility that exceeds that limitation.

Other aspects of this agreement not directly related to the rate provision or the facility description also militate against concluding that the parties intended 13.85 MW to be a limitation on output. First, the defendant is obligated to purchase the entire output, both by statute and by the terms of the agreement. See Connecticut Light & Power Co. v. Dept. of Public Utility Control, supra, 210 Conn. 355-58. Establishing a maximum output would be inconsistent with that obligation. Second, the agreement closely tracks the relevant statutory requirements. The statute mandates that the municipal rate be paid for output attributable to franchise waste. There is no indication that the parties intended to deviate from the statute in this single aspect. Third, the contract provides, in § 4, that the facility must be constructed and operated prudently and that the plaintiffs are obligated to maximize output within the confines of that restriction. An arbitrary maximum of 13.85 MW would be inconsistent with that mandate. We believe, moreover, that it would be unreasonable to conclude that sophisticated parties such as the plaintiffs and the defendant would enter into an agreement by which they intended to establish a maximum output of 13.85 MW and a substantially lower rate for the excess energy above that amount in the manner advocated by the defendant.

Consequently, we are not persuaded that the parties’ agreement established a maximum limit above which the excess output is governed by a rate not mentioned anywhere in the agreement. Neither the facility description nor the rate provision, when construed in light of the entire agreement and the statute that mandates its relevant terms, leaves any doubt as to the intent of the parties. The definitive terms of the agreement require that, to the extent that electrical output is attributable to franchise waste, it must be purchased at the municipal rate.

The judgment is affirmed.

In this opinion the other justices concurred.

       There are three plaintiffs: Southeastern Connecticut Regional Resources Recovery Authority, American Ref-Fuel Company of Southeastern Connecticut, and Air Products and Chemicals, Inc.

       The department is not a party to this appeal, although it was a party to the appeal to the Superior Court, which ruled contrary to its position. The office of consumer counsel and the Connecticut Resources Recovery Authority were also listed as defendants in the appeal to the Superior Court, but they are not involved in this appeal. References to the defendant are to the Connecticut Light and Power Company.

       General Statutes § 16-1 (a) (8) provides: “ ‘Electric company’ includes every corporation, company, association, joint stock association, partnership or person, or lessee thereof, owning, leasing, maintaining, operating, managing or controlling poles, wires, conduits or other fixtures, along public highways or streets, for the transmission or distribution of electric current for sale for light, heat or power within this state, or engaged in generating electricity to be so transmitted or distributed for such purpose, but shall not include a private power producer, as defined in section 16-243b, a municipal electric utility established under chapter 101, a municipal electric energy cooperative established under chapter 101a, an electric cooperative established under chapter 597 or any other electric utility owned, leased, maintained, operated, managed or controlled by any unit of local government under any general statute or any public or special act . . .

       General Statutes § 22a-260 (11) provides: “ ‘Resources recovery facility’ means a facility utilizing processes aimed at reclaiming the material or energy values from solid wastes . . . .”

       General Statutes (Rev. to 1989) § 16-243e provides: “Any electric company, as defined in section 16-1, purchasing electricity generated by a resources recovery facility, as defined in section 22a-260, owned by or operated by or for the benefit of a municipality or municipalities, shall enter into a contract with the owner of such facility requiring the electric company to purchase such electricity, for a period beginning on the date that the facility begins generating electricity and having a duration of not less than twenty years, at the same rate that the electric company charges the municipality or municipalities for electricity.”
      This is the text of the statute as it appeared at the time the agreement was entered into by the parties and approved by the department. It was amended by Public Acts 1994, No. 94-92, § 1, to clarify the language to comport with our interpretation of the statute in Connecticut Light & Power Co. v. Dept. of Public Utility Control, 210 Conn. 349, 357-58, 554 A.2d 1089 (1989). See 37 S. Proc., Pt. 3, 1994 Sess., p. 994; 37 H.R. Proc., Pt. 12, 1994 Sess., pp. 4333-34. The statute, as amended, provides: “Any electric company, as defined in section 16-1, purchasing electricity generated by a resources recovery facility, as defined in section 22a-260, owned by, or operated by or for the benefit of, a municipality or municipalities, shall enter into a contract with the owner of such facility requiring the electric company to purchase all of the electricity generated at such facility from waste which originated in the franchise area of the electric company, for a period beginning on the date that the facility begins generating electricity and having a duration of not less than twenty years, at the same rate that the electric company charges the municipality or municipalities for electricity.” (Emphasis added.)

       While that appeal was pending, the parties entered into, and the department approved, an interim agreement that allowed for contingent rates in the event that it was concluded as a matter of law that (1) § 16-243e is unconstitutional because of federal law preemption, or (2) the defendant is not obligated to pay the municipal rate for energy attributable to waste obtained from towns outside of its franchise. Southeastern Connecticut Regional Resources Recovery Authority, Department of Public Utility Control, Docket No. 87-06-12 (November 30, 1988). This is the agreement that is at issue here. Only the latter contingency has come to pass because this court declined to reach the issue of constitutionality, and the question of federal preemption is not yet finally decided. See footnote 12 of this opinion.

       Southeastern Connecticut Regional Resources Recovery Authority is composed of eleven member towns; East Lyme, Griswold, Groton, Ledyard, Montville, New London, North Stonington, Norwich, Sprague, Stonington and Waterford. In addition, the facility accepts waste from Madison and Guilford. The defendant does not service customers in Norwich, the Jewett City borough of Griswold, the city of Groton and portions of the town of Groton. These areas are, therefore, outside of the defendant’s franchise area. Approximately 30 percent of the facility’s waste comes from those nonfranchise areas. Accordingly, 30 percent of the output is purchased at the avoided cost rate and 70 percent is purchased at the municipal rate. See Connecticut Light & Power Co. v. Dept. of Public Utility Control, 210 Conn. 349, 357-58, 554 A.2d 1089 (1989).

       General Statutes § 16-243b (a) (3) provides in relevant part: “ ‘Private power producer’ means ... (C) ... a political subdivision of the state or any other person, firm or corporation . . . which generates electricity solely through ownership of one hundred per cent or less of a private power production facility . . . .”

       General Statutes § 16-243a (b) provides in relevant part: “Each electric public service company . . . shall: (1) Purchase any electrical energy and capacity made available ... by a private power producer . . . .”

       The agreement, in § 10, incorporates this requirement: “Seller shall deliver to Buyer and Buyer shall purchase from, Seller the entire net electric output of the Facility for the Term, as reduced by electrical losses as described in Section 6(b) of this Agreement.” (Emphasis added.)

       General Statutes § 16-243a (c) provides in relevant part: “The rates for electricity purchased from a private power producer shall be based on the full avoided costs of the electric public service company . . . .”

       We concluded that it was unnecessary to address the constitutional question because it “[was] not . . . absolutely necessary to the decision of the case . . . .” (Internal quotation marks omitted.) Connecticut Light & Power Co. v. Dept. of Public Utility Control, supra, 210 Conn. 358 n.17. The defendant, however, has pursued the constitutional issue of federal law preemption of § 16-243e in an appeal to the Federal Energy Regulatory Commission. The Federal Energy Regulatory Commission concluded that, at least inasmuch as the municipal rate statute requires payment at a rate in excess of an electric company’s avoided cost rate, the statute is preempted byfederallaw. Connecticut Light & Power Co., 70 Federal Energy Regulatory Commission K61,012, reconsideration denied, 71 Federal Energy Regulatory Commission K61,035 (1995). An appeal from this decision was taken to the Court of Appeals for the District of Columbia Circuit, but was dismissed for lack of jurisdiction. Niagra Mohawk Power Corp. v. Federal Energy Regulatory Commission, 117 F.3d 1485 (D.C. Cir. 1997). The determination of that issue is currently pending in the United States District Court for the District of Connecticut. The parties have not raised a constitutional challenge in the present appeal. Accordingly, we proceed on the assumption that § 16-243e is valid.

       The agreement, in § 2, incorporates by reference exhibit A, entitled “Facility Description.” Section 2 provides: “(A) The Facility will generate electrical energy by the use of municipal solid waste as described in Exhibit A, attached hereto and incorporated herein.” Exhibit A provides: “The Facility consists of (a) waste combustion/boiler trains, fuel handling equipment, air pollution control equipment and related auxiliary equipment and systems for receiving and combusting solid waste and producing steam; (b) a turbine/ generator and related equipment for converting the energy in the steam to electricity; and (c) buildings and structures for housing the equipment and related activities.
      “The facility will have a nameplate capacity of approximately 600 tons per day of solid waste (5,000 BTU/LB. HHV). The turbine/generator will have nameplate capacity, net of station use, of approximately 13.85 MW.”

       The agreement contains no provision with respect to the proper basis upon which to measure the 13.85 MW output. In its request, the defendant argued that the 13.85 MW limit should be determined on an hourly basis. The department noted that there are many factors that will cause the specific output to vary greatly in short periods (e.g., hours or days). It concluded that a monthly average would fairly take account of these variants and that the 13.85 MW maximum should, therefore, be based on a monthly average. The defendant challenged this decision in the trial court. The court concluded, however, that there was substantial evidence in the record to support the department’s conclusion and, therefore, affirmed the department’s decision. This issue has not been raised on appeal to this court. We, therefore, accept that the 13.85 MW “limit” is measured on a monthly average.

       The plaintiffs sought to stay this declaratory ruling proceeding and to compel arbitration. They argued that the dispute related to “technical and engineering matters,” the resolution of which is committed to arbitration by the agreement. The trial court concluded that this was a payment dispute to be properly resolved before the department, not at arbitration. The Appellate Court affirmed the decision of the trial court and remanded the case to the department. Connecticut Resources Recovery Authority v. Connecticut Light & Power Co., 34 Conn. App. 246, 249, 641 A.2d 398 (1994).

       While this declaratory ruling proceeding was pending, the plaintiffs received, in December, 1993, a permit from the department of environmental protection to increase the amount of waste processed on a daily basis from 600 tons to 689 tons. The output has been higher than 13.85 MW for twelve of the seventeen months following receipt of the permit from the department of environmental protection. Prior to receipt of the permit, the facility exceeded the 13.85 MW figure on an hourly basis, but it never exceeded that amount on a monthly average.

       General Statutes § 4-176 (a) provides: “Any person may petition an agency, or an agency may on its own motion initiate a proceeding, for a declaratory ruling as to the validity of any regulation, or the applicability to specified circumstances of aprovision of the general statutes, aregulation, or a final decision on a matter within the jurisdiction of the agency.” General Statutes § 4-183 (a) provides: “A person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision may appeal to the Superior Court as provided in this section. The filing of a petition for reconsideration is not a prerequisite to the filing of such an appeal.” General Statutes § 4-166 (3) provides in relevant part: “ ‘Final decision’ means . . . (B) a declaratory ruling issued by an agency pursuant to section 4-176 . . . .”

       General Statutes § 4-183 (j), which contains the standard of review for an administrative appeal, provides: “The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court shall affirm the decision of the agency unless the court finds that substantial rights of the person appealing have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law; (5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. If the court finds such prejudice, it shall sustain the appeal and, if appropriate, may render a judgment under subsection (k) of this section or remand the case for further proceedings. For purposes of this section, a remand is a final judgment.” (Emphasis added.)

       To overcome the absence of an alternative rate in the agreement, the defendant argues that the agreement does, in fact, contemplate other rates. The argument is unavailing. The rates to which the defendant refers are very specific in their applicability. They are the rates to be paid after the twenty year term expires, an alternative rate to be paid if the municipal rate statute is declared unconstitutional, and a rate that is to be paid for that 30 percent of the output that is nonfranchise energy. There is absolutely no alternative rate provided in the agreement for electrical output in excess of 13.85 MW.

       The department acknowledged in its ruling that there are numerous factors that cause a facility’s output to vary in short periods of time. For that reason, the department chose to measure the output on a monthly basis as a more accurate reflector of the actual output. In light of these variants, known throughout the industry, it would have been expected that the parties would include a specification regarding how the output limitation is to be measured.

       For example, the agreement provides that: (1) the buyers will purchase the entire net output; (2) the rate for output attributable to franchise waste will be the municipal rate; (3) the alternative rate for output attributable to nonfranchise waste will be the avoided cost rate; and (4) the term of the agreement will be twenty-five years, but purchases at the municipal rate will last only for twenty years. Each of these provisions comports with the statutory mandate of § 16-243e as interpreted in Connecticut Light & Power Co. v. Dept. of Public Utility Control, supra, 210 Conn. 355-58.