New Haven Independent

She announced at a Representative Town Meeting last month that the Marcus Law Firm stood ready to help any resident who has the same kind of land violation problems that our newly re-elected state representative, Peter Panaroni, has had.

Panaroni had owed $50,000 in property taxes on his place of business at 44 Tabor Drive. His attorneys asked First Selectwoman Cheryl Morris and Ed Marcus, town counsel, to lift a cease and correct order that the Inland Wetlands Commission had attached to the property on November 5, 2005. Panaroni wanted to transfer the deed from his mother to himself. He needed title in his own name in order to refinance the property.

According to minutes of meetings, Diana Ross, the Inland Wetlands Officer, said Ed Marcus required her to lift the order on December 8, 2005, nearly a year ago. Panaroni then refinanced the property and the cease and correct order was restored on Dec. 29, 2005 after the deed and mortgage were recorded. Last March Panaroni sued the town’s Zoning Board of Appeals because its rulings went against him. The Marcus Law firm is defending the town in New Haven Superior Court.

Mrs. Morris and Shelley Marcus say they were not playing favorites. Cheryl tried to explain to the RTM. She wanted to provide them with “a little more information.” But she didn’t get very far.

“I know there were some issues prior to my taking office and I don’t know specifically all the details. Mr. Panaroni wanted to have a piece of property transferred to his own name from his mother’s name. She could no longer pay the taxes. Now I don’t know what kind of analogy you want to use,” she said, looking now at Ms. Marcus. “But the town allowed…” At the word “allowed,” Ms. Marcus stood up and took over.

Ms. Marcus now enunciated what appears to be a new town policy.
“Had anybody, had Joe Q. Public come to us and asked us to do this, we would have said certainly. Because the town of Branford would get its property taxes. There was quite a bit of property taxes due on that property.” Marcus said Panaroni’s attorney “called and said we are doing a refinance and the town’s property taxes are going to be paid as a result of this refinance.

“There was a cease and desist order on the land records. And as any bank would want to do, they won’t file a mortgage if they find an encumbrance in front of them. We were asked can we release the cease and desist order for a day, allow the mortgage to go thru, the town will be paid its property taxes and then the order can immediately go back on. Had anybody made that request of us, the answer most certainly would have been yes. The order goes right back on and the town collects its property taxes.” Then she sat down.

No doubt the lifting of the order pleased Alphonse Ippolito, Len Fasano and Timothy Lee, the attorneys who represent the state representative. The Panaroni property at 44 Tabor Drive was now clean. At least they thought it was. In a letter to the Sound newspaper, Ippolito expressed dismay and surprise that the violation went back on the Panaroni property. It doesn’t look good for him or his firm. He said outright the town had reneged on its part of the deal and restored the violation “without our consent or agreement.”

But what about the bank?

According to one legal authority who spoke to the Eagle on a background basis, “There are two potentially inconsistent hypotheses regarding the bank: One is they were ignorant of the situation and they are a victim. The other is they are quiet participants and for whatever reason went along.”

Either way, the bank could say to its auditors that the property was clear when the refinancing took place and that the bank acted in good faith after conducting a formal title search. A bank might also observe that it relied on attorneys who are in a position of trust.

Charlie O’Malley, the president of The Guilford Bank, said he was not familiar with the case, but even if he were, privacy regulations would prevent him from commenting.

In general, he said that if a property mortgaged to the bank is free and clear, and then an order or lien that had been removed is later re-imposed, the key issue is whether the town’s lien is, in banking parlance, “junior” to the bank’s mortgage. What banks want to know is that in the event of a default, the bank is first in line to recover. So from the bank’s point of view, it must be first. If the town asserted its liens came first, because in fact the orders on the land came well before the mortgage, then the dispute could wind up in court.

But since the town’s orders were restored to the Panaroni property after the mortgage was finalized, it seems likely the bank comes first and the town comes second. The result is that even though the town received its $50,000 in property taxes, the town may have been poorly served because that is all it received.

For starters, our outside specialist said, the town could simply have foreclosed on the land. That way it would have received both property taxes and presumably the enormous $1,000 a day in fines leveled against Panaroni’s property.
“You can say well, the taxes were paid. But if the taxes were not paid, they could have foreclosed on the land and gotten them paid. So it sounds to me as though the town got hosed. They surrended a superior credit and took back an inferior one is the simple truth.”

As a result, Mrs. Morris and town attorneys enabled the property to be refinanced, the taxes paid and to top it off, agreed to a mere $500 fine. There is an irony here because The Marcus Law Firm is well known for its expertise in foreclosure litigation. It did not take that route in this case.

There is another consequence. The IWC and the ZBA, the agencies that issue cease and correct and cease and desist orders, and the town officers who enforce them, now have been placed in a position where their authority is being usurped by town counsel. This diminishes their ability to enforce their violations, especially in light of Ms. Marcus’s recent offer to help out similarly situated town residents.

Attorney Peter L. Black, a Republican RTM member, lost to Panaroni in the recent election. In the days before the election, Black released the public records showing the Morris and Marcus involvement in the Panaroni land deal. The records showed Panaroni had failed to correct violations over the past five years and then exacerbated his situation when he rented the property to Sani-Can, a portable toilet company.

After the election, Black sent a letter to the RTM, signed by six Republicans and one Democrat. “The close relationship between Ed Marcus and Mr. Panaroni raises doubts as to whether the Marcus Law Firm can zealously represent the interests of the town in litigation involving Mr. Panaroni,” the letter said. For one thing Ed Marcus arranged for the order on the Panaroni property to be lifted. For another, says Black, Marcus and Panaroni are
close e political allies and friends. Now Marcus’s firm is defending the town against the man he helped.

Panaroni filed the lawsuit on March 31, 2006 and David Doyle, who works for the Marcus firm, was assigned the case. The Eagle looked at the court record last week and so far no briefs have been filed by either side.

Black asked whether the ZBA “had formally waived any conflict of interest on the part of the Marcus Law Firm.” This question has not yet been answered.

Shelley Marcus rose to defend her law firm’s honor. “Our office has an outstanding reputation and part of that reputation is our ethical conduct. I am proud to say there has never been a grievance filed against myself or anybody else in The Marcus Law Firm for conflict of interest. We have the highest ethical standards; always have and always will.”

Nonetheless, Black asked that the conflict of interest issue be sent to committee for examination. After some back and forth between himself and John Smith, the Majority leader, who viewed Black’s assertions as political in nature, the RTM agreed to send the issue to the Administrative Services committee, where it will get its first airing next week.

Meanwhile, on Nov 28, The New Haven Register published a front page story in which Panaroni decried the state’s recent decision to dump debris at a storage site just off Exit 53 on I-95. “It’s just not right,” Panaroni was quoted as saying. “It’s not fair to the people of Branford.” We wonder what the IWC and the ZBA, as well as Panaroni’s neighbors on Tabor Drive, were thinking when they read this.

The state statutes covering land violations are severe. Panaroni was ordered to pay violations of $1,000 a day and any subsequent violation could have brought a $2,000 a day fine.

In the end, with the help of Mrs. Morris, Ed Marcus and Shelley Marcus, Panaroni accomplished a deal that was sweet indeed. Panaroni may be the first to profit from this newly announced policy of the Morris-Marcus regime. Isn’t it dandy for the town that they stand ready to do this for all residents with similar problems?

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