Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—ConnAppCt: Connecticut Unfair Practices Law Does Not Apply to Town When Charging Building Permit Fees, (Apr 24, 2013)

By Tobias J. Gillett, J.D., LL.M.

Building companies failed to state Connecticut Unfair Trade Practices Act (CUTPA) claims against the town of Madison, Connecticut, over allegedly excessive building permit fees because the CUTPA does not apply to towns when they charge those fees, a Connecticut appellate court has ruled (Neighborhood Builders, Inc. v. Town of Madison, April 30, 2012, Borden, D.).

In 2004, a number of building companies brought suit against the town of Madison, alleging that it had violated CUTPA by charging building permit fees significantly in excess of the cost to the town of regulating building activities, and using the proceeds to fund social programs and other activities unrelated to building activity. The trial court granted summary judgment to Madison, concluding that CUTPA does not apply to it in its activity of charging building permit fees. The builders appealed.

The appeals court explained that CUTPA provides that it does not apply to "[t]ransactions or actions otherwise permitted under law as administered by any regulatory board or officer acting under statutory authority of the state."

In Danbury v. Dana Investment Corp., 249 Conn. 1 (1999), the Connecticut Supreme Court interpreted this provision to exempt allegations that a city had overassessed real properties and engendered needless foreclosure costs, "because the process of real estate assessment by a municipality is authorized and regulated by statute, and because there is no case in which CUTPA had been applied to a municipality acting in its statutory function of collecting unpaid taxes by foreclosing on previously unchallenged tax liens."

In Connelly v. Housing Authority, 213 Conn. 354 (1990) the Supreme Court held that the provisions exempted allegations that a city housing authority violated CUTPA by failing to provide adequate heat and hot water to tenants, because the renting of subsidized apartments was regulated by federal and state agencies, and because the Federal Trade Commission Act (FTCA), the "lodestar for determining the scope of CUTPA," had never been applied to an "act of practice of a local public agency."

The appeals court found these decisions to be dispositive of the present case. The town of Madison’s building official was appointed pursuant to Connecticut statute. The official was authorized to enforce the state building code and to issue building permits to applicants that met its requirements and those of other regulations. Moreover, the building code "specifically authorize[d] each municipality to establish a schedule of fees for building permits." Finally, as in Danbury and Connelly, the FTCA had never been applied to an "act of practice of a local public agency."

The case is No. AC 34191.

Attorneys: William Andrew Lichtenfels (The Law Offices of William Andrew Lichtenfels) for Neighborhood Builders, Inc. Robert M. Langer (Wiggin and Dana LLP) for Town of Madison.

Companies: Neighborhood Builders, Inc.

Cases: StateUnfairTradePractices ConnecticutNews