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THOMAS C.C. SARGENT, TRUSTEE v. ANNE LENA SMITH (SC 17093)
Sullivan, C. J., and Borden, Norcott, Katz and Palmer, Js. Argued November 24, 2004--officially released February 8, 2005

Stephen F. Donahue, with whom was Sabato P. Fiano, for the appellant (defendant). Hale C. Sargent, for the appellee (plaintiff).
Opinion

KATZ, J. In this action alleging breach of a lease agreement, the plaintiff, Thomas C.C. Sargent, trustee, appealed to the Appellate Court from the judgment of the trial court rendered in favor of the defendant, Anne Lena Smith, claiming that the trial court improperly had accepted the conclusions of the attorney trial referee (referee) that: (1) a mortgage foreclosure action against the plaintiff extinguished the defendant's liability to pay water charges under her lease with respect to the mortgaged property; and (2) the plaintiff failed to establish damages as a result of the defendant's nonpayment of those charges. The Appellate Court agreed with the plaintiff and reversed the judgment of the trial court, determining that ``neither the mortgage, nor the institution of the foreclosure action, nor the judgment of strict foreclosure extinguished the defendant's obligation under the lease to pay the . . . charges and [her] failure to pay the charges damaged the plaintiff.'' Sargent v. Smith, 78 Conn. App. 691, 699, 828 A.2d 620 (2003). The defendant thereafter sought reconsideration, asserting, inter alia, that the Appellate Court should remand the case to the trial court for further proceedings to allow her to present evidence on the special defenses that had not been decided as a result of the judgment rendered by the trial court. Following the denial of that motion, the defendant petitioned this court for certification to appeal, which we granted, limited to the following issues: Did the Appellate Court properly reverse the trial court's judgment rendered in favor of the defendant, and, if so, did the Appellate Court properly direct judgment for the plaintiff in the amount of $40,881.37, rather than remand the case for a new trial. Sargent v. Smith, 266 Conn. 926, 835 A.2d 476 (2003). We agree with the defendant that the Appellate Court improperly reversed the judgment of the trial court because the referee reasonably had found that the plaintiff failed to prove that he would have been

entitled to, and indeed would have recovered, the money held by the receiver of rents had the receiver not paid the governmental authority that was owed the water charges.1 The opinion of the Appellate Court sets forth the following relevant procedural history and facts, as found by the referee. ``On August 12, 1988, the defendant entered into a written lease with the plaintiff for the rental of property [the plaintiff] owned [located in the city of Bridgeport]. In the lease, the defendant agreed to pay all [r]eal [e]state [t]axes, which included all taxes and assessments levied, assessed or imposed at any time by any governmental authority. The defendant further agreed that it was a net lease in that the intention [thereof] is that the rent and additional rents . . . shall be net to the landlord. ``Water charges from the Bridgeport water pollution control authority [water authority] began to accrue on November 30, 1988. At all times throughout the duration of the lease, the [water] authority billed the plaintiff for water. On November 15, 1991, the plaintiff refinanced the property. In doing so, the plaintiff personally guaranteed a note in favor of, and transferred a mortgage deed to, Gateway Bank (Gateway). He also executed an assignment of leases2 and an assignment of sales, proceeds, deposits and earnest money to Gateway. ``Subsequently, the plaintiff defaulted on the note, and, thus, Praedium Chief, LLC, an assignee of the mortgage,3 initiated a foreclosure action in February, 1996.4 During the pendency of the foreclosure action, the court appointed a receiver of rents (receiver), who was directed by court order on May 12, 1997, to pay the [water] authority the entire balance of the outstanding water charges, which totaled $40,881.37, and [those charges] were paid . . . on June 5, 1997. ``On August 25, 1997, the [trial] court rendered a judgment of strict foreclosure pursuant to a stipulation under which a subsequent assignee of the mortgage, Adare, LLC, waived the deficiency5 and agreed that the remaining funds held by the receiver, minus certain fees and costs,6 would be paid to the plaintiff, who agreed to an accelerated law day. Thereafter, the plaintiff initiated the present action against the defendant to recover the sum of $40,881.37, which the receiver was ordered to pay to cover the [water] authority's charges. . . . ``On the basis of [the aforementioned] facts, the referee concluded, and the court accepted the conclusion, that the plaintiff was not entitled to recover from the defendant the amount of the payment to the [water] authority because the foreclosure action had extinguished all obligations under the lease and the plaintiff had failed to prove he would have ultimately been enti-

tled to the money.'' (Internal quotation marks omitted.) Sargent v. Smith, supra, 78 Conn. App. 692

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