Receiver Appointed – Tenants to Get Heat and Hot Water
By Barbara Heimlich
Editor
Sources: SUPERIOR COURT, JUDICIAL DISTRICT OF BRIDGEPORT AT BRIDGEPORT, CONNECTICUT, SEPTEMBER 23, 2024; Daniel Tepler, CT Post Reporter
Posted at 4 p.m. on 9/23, on Facebook: Receivership Granted
Following four days of trial, Superior Court Judge Dale Radcliffe found by “clear and convincing evidence”, that a receiver is necessary to prevent the complex from plunging into “financial chaos”. After finding that the 924-unit Success Village co-op is not able to properly manage its own finances, Judge Radcliffe ordered that a Stratford lawyer be appointed to take over the private complex’s operation.
He appointed attorney Barry Knott as receiver for the complex that straddles the Bridgeport/Stratford line. Knott is the founder and senior partner of the Stratford law firm Knott, Knott and Dunn, and has been practicing law since 1974, specializing in elder, real estate, commercial, probate, and tax law. He said he had spoken to plumbers and contractors and they were working on a temporary fix. Note: On The Mark Management to date is still the management company for the complex.
“The full and absolute control of all property and assets of Success Village shall immediately vest in the receiver and the receiver shall manage, operate and control the premises for the benefit and support of the residents,” the judge ruled. He continued, “The Success Village, its board, officers and agents are to immediately fully cooperate with the receiver in order for him to manage the premises in his sole discretion, subject only to direction from the court. An emergency situation exists and prompt remedial action is necessary.”
The city of Bridgeport and Town of Stratford are now expected to loan the complex $650,000 to temporarily repair the heating system, which was shut down in May due to safety concerns.
Dennis Bradley, the lawyer for Success Village, argued Monday that appointing a receiver to take over the complex’s finances would be un-American. “You have to let folks pull themselves up by their bootstraps,” he told the judge.
Richard Buturla, the lawyer representing the city of Bridgeport and the Town of Stratford, countered that the management of the co-op have no plan and no funding to restore heat and hot water to the complex, and have mismanaged the money they had.
“The 2,000 to 3,000 people who reside at Success Village deserve to have heat and hot water. They also deserve to have a safe environment,” Buturla said.
The judge’s decision came after Success Village President Tyreke Bird on Monday blamed a dysfunctional board, city officials and the ongoing court hearing as responsible for residents of the co-op not having heat and hot water.
Asked to explain how the co-op, which straddles the Bridgeport/Stratford line, went from a surplus before he became president in May, 2022, to a $3 million deficit now, he testified that Success Village has “a lot of expenses, a lot we inherited. We have loans that were taken out that have to be repaid, so that’s where our money has gone.”
Bird was the fourth witness called by Bradley. The courtroom was filled with residents of the co-op, many who said they were there to see Bird testify. At one point, Judge Radcliffe had to quiet the gathering as they jeered Bird’s answers.
Under cross examination by Buturla, Bird acknowledged that when he became the board president, Success had a $2.6 million positive fund balance with between $800,000 and $900,000 in a capital reserve account.
“That could have been used to pay the cost for temporary boilers. That’s how much they would have cost, right?” Buturla asked.
“It could have,” Bird replied. “But there still would have been repairs that would have to be paid for.”
Asked about the $289,000 in professional expenses and $923,000 in legal expenses paid out by Success last year, Bird testified that much of that money went to pay off debts to the Water Pollution Authority at $30,000 a month.
When Buturla pointed out in the co-op’s financial records that there is a separate entry for $878,674 for sewer expenses for 2023, Bird admitted he wasn’t that familiar with the co-op’s financial records.
Bird also said numerous cash withdrawals from a bank branch on Boston Avenue were made by him to pay the salaries of the co-op’s employees.
According to testimony presented during the trial, the co-op owes $241,597 in back taxes to the town of Stratford and more than $2 million in delinquent taxes to Bridgeport.
Under state law, if residents still don’t have heat once heating season begins in October, the city of Bridgeport and the Town of Stratford will be responsible for relocating the more than 2,000 residents.
United Illuminating Co. and the Southern Gas Company have also sued the co-op’s management, claiming they are owed in excess of $1.3 million.
“In light of the judge’s order, we agreed Barry Knott would be an appropriate receiver,” Bradley said. “We are exploring what avenues are available at this point, but the board members will comply with the judge’s order.”
Before rendering his decision, Judge Radcliff noted: “The Court is prepared to enter a ruling at this time. Before I do, I want to thank all counsel in this case for assisting and expediting this matter once it was returned from the Federal District Court. And if there was ever a case in which the phrase ‘time is of the essence’ was appropriate, it is this one. Also, I don’t want there to be any displays of approval, or disapproval, or any outbursts during the course of the Court’s decision or following that decision.”
According to Madeleine Zuniga-Aguilar, an accountant engaged by Success Village, tax returns to the United States and the State of Connecticut have not been filed for the years 2022 and 2023, and the Court finds that testimony credible. Cash assets have been depleted to the extent that there are insufficient funds to pay the tax and utility arrearages. The last available balance sheet or audited balance sheet was prepared by Achille A. Apicella, a certified public accountant who was engaged by Success Village and was terminated in 2020. The audited statement showed a balance in excess of three million dollars.
The State of Connecticut Weighed In On Lawsuit: Letter from Attorney General William Tong
Honorable Julie A. Manning
United States Bankruptcy Court
District of Connecticut- Bridgeport Division
Brien McMahon Federal Building
915 Lafayette Boulevard
Bridgeport, CT 06604
Re: In Re: Success Village Apartments, Inc. Case No.: 24-50624 Chapter 11
Dear Judge Manning:
The Attorney General’s Office has received numerous requests for assistance from both desperate residents of Success Village, as well as concerned local and state elected officials, to help prevent a major public health and/or safety crisis from occurring, given the rapid onset of colder temperatures that fall/winter brings.
I share the concerns of local and state elected officials, and am deeply concerned with the public health and safety of the reportedly two thousand impacted residents of Success Village—which includes many vulnerable elderly and minor children that reside there.
Equally concerning is both the decision and timing of Debtor’s bankruptcy filing amid pending Superior Court hearings regarding whether that Court should grant the municipalities request to appoint a receiver for Success Village (see FBT-CV24-6137211-S).
Winter is coming and very little time remains to allow remedial steps to be taken to protect the vulnerable population of Success Village, and the municipalities efforts to do so fall squarely within the Code’s policy and regulatory exception to the automatic stay, per 11 U.S.C. section 362(b)(4).
Even if the Superior Court ultimately rules in favor of the municipalities and appoints a receiver to take over the management of Success Village, they will have precious little time to fully account for Success Village’s present finances and assess any/all viable options to ensure the complex’s heating/hot water needs are addressed before the temperatures drop.
Out of concern for the larger public health and safety interest of the residents of Success Village and the larger community that would be negatively impacted should this crisis worsen in the coming winter months, I respectfully urge this Court to grant the municipalities’ request for relief as outlined in the municipalities motion filed September 9, 2024, and allow the Superior Court to proceed in adjudicating whether to grant the municipalities’ pending request to appoint a receiver for Success Village.
Very truly yours,
WILLIAM TONG
Twitter: @AGWilliamTongFacebook: CT Attorney General
Barry Knott said Tuesday he was going to end much of the litigation filed by the co-op’s management. And one of his first orders was to have them withdraw the lawsuit filed in Superior Court against Councilwoman Maria Pereira for her activities in support of residents. The lawsuit against Pereira was filed in May after she joined protests by Success Village residents after they lost heat and hot water at the 924-unit complex.
The lawsuit stated that Pereira defamed the housing complex’s management and interfered with their contractual business with the complex’s residents when on May 18 she got on a loudspeaker outside the complex and told residents to pay their monthly common fees into an escrow account until management restored heat and hot water.
Pereira’s lawyer, Jonathan Klein, filed a motion to dismiss the lawsuit contending that it was a SLAPP suit or strategic lawsuit against public participation designed to punish Pereira for her lawful exercise of her right of free speech and her right of association under the federal and state constitutions regarding a matter of public concern related to health, safety and community well-being.
“She (Pereira) had merely suggested that the Success Village leaseholders, more than a thousand of whom are her constituents, pay their monthly common charges into an escrow bank account while Success Village was not providing them with heat and hot water,” said Klein. “ I had been looking forward to a hearing on the merits of our special motion to dismiss, which we had filed under he anti-SLAPP statute, but Ms. Pereira is pleased that this improper and frivolous lawsuit is now over.”
Residents weigh in following Attorney Barry Knott being named as the receiver for the complex:
Jenn Schick: y’all the biggest sigh of relief! after two years of me screaming pay our taxes and pay our bills, they will finally be getting paid in due time !
Richard Matos: I know it’s been a whirlwind the last couple of days folks, but we all need to keep a level head and let Attorney Knott set the wheels in motion to repair the two years of damage we have suffered through. Rumors do not help and we all need to take a deep breath and sift through all the reports out there and seek out accurate information. Success will rise like a Phoenix. The phrase “rising from the ashes like a phoenix” is a metaphor that means to emerge from a difficult situation stronger and more powerful. The phoenix is a mythical bird from Greek mythology that symbolizes renewal, hope, and rebirth.
Bob Edwards: There is a lot happening here at SVA. I have been putting my common fees in escrow since June. I will continue to do that until I hear/read a clearly defined plan for solutions to the heat and hot water issues. That will include work on a temp or permanent solutions has commenced. I will also need to see a solution to reestablishing a functioning management structure for the day-to-day operations of SVA. Hopefully, that will be resolved through On The Mark Management returning as our property manager.
