Opinion
No. HHD-X04-CV-10-6024812-S
November 8, 2011
MEMORANDUM OF DECISION RE CT WALLINGFORD'S MOTION TO DISMISS
I. BACKGROUND
CT Wallingford, LLC ("CT Wallingford") has moved to dismiss Count One of the First Amended Cross-Complaint filed by the defendant, Cosenza Construction, Inc., on June 30, 2011. CT Wallingford claims that this court lacks subject matter jurisdiction to consider the cross-complaint as to CT Wallingford, because Cosenza did not timely assert the cross-complaint against CT Wallingford, and did not timely file a notice of lis pendens naming CT Wallingford as a party to the cross-complaint.
The following procedural history is relevant to CT Wallingford's claim, and is not disputed. This action was commenced by the plaintiff, Gallicchio Enterprises, LLC ("Gallicchio"), by a complaint dated May 28, 2010, to foreclose a mechanic's lien. In addition to naming the owner of the property, PRA Wallingford, LLC, as a defendant, Gallicchio named as defendants other contractors, including Cosenza, who had recorded mechanic's liens on the subject property. Gallicchio did not name the first mortgage holder at the time, Bank of Smithtown, as a defendant.
Pursuant to a merger, Bank of Smithtown was merged into People's United Bank ("PUB") on or about November 30, 2010. Thus, PUB became the holder of the first mortgage at that time. Thereafter, on or about March 31, 2011, PUB sold the first mortgage and accompanying note to CT Wallingford.
On November 1, 2010, Cosenza filed a cross-complaint seeking to foreclose on its mechanic's lien on the property. The cross-complaint alleges that Cosenza's original mechanic's lien was dated February 12, 2010 and recorded on the Wallingford land records on February 17, 2010. It further alleges that an amended mechanic's lien, dated March 4, 2010, was recorded on the Wallingford land records on March 12, 2010. Cosenza claims in its mechanic's liens that the period during which it performed services or furnished materials used on the property began on June 15, 2007 and ended on December 17, 2009. Cosenza claims that the amount of $434,470.31 remains unpaid for its services. Count One of Cosenza's cross-complaint alleges that the encumbrances of other parties, including the other contractors who had mechanic's liens on the property, are equal or subsequent in priority to Cosenza's lien. It also alleges that Bank of Smithtown's mortgage is equal or subsequent in priority to Cosenza's lien, even though the bank was not a party to the action at the time. The cross-complaint alleges that Cosenza, on November 2, 2010, filed a Notice of Lis Pendens, dated November 1, 2010, in connection with its cross-complaint for foreclosure. The lis pendens identified all of the parties to the Gallicchio action, but did not identify Bank of Smithtown, which was not a party to the action at that time.
On June 14, 2011, Cosenza moved to amend its cross-complaint, and to cite in additional defendants, including CT Wallingford, which, by that time, had stepped into Bank of Smithtown's shoes with respect to the first mortgage. Cosenza's motion was granted on June 29, 2011. Cosenza's First Amended Cross-Complaint was filed on June 30, 2011. The first count alleges the same material allegations as are alleged in the first count in the original cross-complaint, and seeks foreclosure of Cosenza's mechanic's lien. In addition, the first count of the amended cross-complaint alleges that Cosenza was filing a Second Supplemental Lis Pendens. In addition to the parties identified in the original notice of lis pendens, this lis pendens identifies the new defendants added in the amended cross-complaint, including CT Wallingford.
CT Wallingford filed this motion to dismiss on August 12, 2011. CT Wallingford claims that this court lacks subject matter jurisdiction of the claim made against CT Wallingford in the amended cross-complaint because that claim was not brought within one year of when Cosenza recorded its mechanic's liens. CT Wallingford also argues that the claim against it must be dismissed because the notice of lis pendens identifying CT Wallingford was not recorded on the land records within one year of when the liens were recorded.
II. DISCUSSION
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the [claimant] cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Gurliacci v. Mayer, 218 Conn. 531, 544, 590 A.2d 914 (1991). "A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." Upson v. State, 190 Conn. 622, 624, 461 A.2d 991 (1983). Consequently, when considering a motion to dismiss, "a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." CT Page 23272 State v. Marsh McLennan Cos., 286 Conn. 454, 464, 944 A.2d 315 (2008). "It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Wilcox v. Webster Insurance, Inc., 294 Conn. 206, 214, 982 A.2d 1053 (2009).
The failure of a mechanic's lienor to commence an action to foreclose its lien within one year of when the lien was recorded, and to file a notice of lis pendens in connection with the foreclosure action within that same one year period, deprives the court of subject matter jurisdiction over the foreclosure action. Connecticut Steel Co. v. National Amusements, Inc., 166 Conn. 255, 262-263, 348 A.2d 658 (1974). The reason for this is that, "a mechanic's lien is a creature of statute and gives a right of action which did not exist at common law." Diamond National Corp. v. Dwelle, 164 Conn. 540, 543, 325 A.2d 259 (1973). "The general rule is that where a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right — it is a limitation of the liability itself as created, and not the remedy alone." Id.
Consequently, for a lienor to invoke the jurisdiction of the court to foreclose on its lien, it must comply with all of the statutory requirements for doing so. At the same time, the court must keep in mind the well-established guidelines for interpreting those statutory requirements. "Although the mechanics lien statute creates a statutory right in derogation of the common law . . . its provisions should be liberally construed in order to implement its remedial purpose of furnishing security for one who provides services or materials." (Citations omitted.) Thompson and Peck, Inc. v. Division Drywall, Inc., 241 Conn. 370, 375-376, 696 A.2d 326 (1997). Of course, the court "may not depart from reasonable compliance with the specific terms of the statute under the guise of a liberal construction." Id., 376.
CT Wallingford's argument relies entirely on statutory requirements set forth in Conn. Gen. Stat. § 49-39. That statute provides, in relevant part, that "[a] mechanic's lien shall not continue in force for a longer period than one year after the lien has been perfected, unless the party claiming the lien commences an action to foreclose it, by complaint, cross-complaint or counterclaim, and records a notice of lis pendens in evidence thereof on the land records of the town in which the lien is recorded within one year from the date the lien was recorded . . . Each such lien, after expiration of the one-year period . . . shall be invalid and discharged as a matter of law."
There is no dispute over the dates on which Cosenza took various actions regarding its liens. The only question is the legal effect of those actions in light of the statutory language set forth above. Cosenza perfected its lien, at the latest, on March 12, 2010, when it filed its amended mechanic's lien on the Wallingford land records. Thus, in order to comply with Conn. Gen. Stat. § 49-39, Cosenza needed to commence an action to foreclose the lien and record a notice of lis pendens by March 12, 2011. Cosenza met both of these requirements when it filed its cross-complaint on November 1, 2010 and its notice of lis pendens on November 2, 2010.
CT Wallingford argues that while Cosenza's actions may have been effective to preserve its right to foreclose its lien as to the parties named in the cross-complaint and the lis pendens, it was not effective as to CT Wallingford because CT Wallingford was not named in either. Cosenza first named CT Wallingford as a defendant in its foreclosure cross-complaint no earlier than June 30, 2011, when it filed its First Amended Cross-Complaint. And, it first named CT Wallingford in a notice of lis pendens "in evidence thereof" at the same time. Consequently, it is undisputed that CT Wallingford was added to Cosenza's foreclosure action and named in a notice of lis pendens related to the action more than one year after Cosenza perfected its lien.
The issue, therefore, is whether Conn. Gen. Stat. § 49-39 precludes foreclosure against a party that was neither named as a defendant in an otherwise timely filed action, nor identified in a timely filed notice of lis pendens associated with the action, within one year of when the lien in question was perfected. Of course, the starting point for resolving the issue is the language of the statute itself. "When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply . . . In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered . . ." (Footnote, citations and internal quotation marks omitted.) Kinsey v. Pacfic Employers Insurance Company, CT Page 23274 277 Conn. 398, 405, 891 A.2d 959 (2006).
There is nothing in the plain language of Conn. Gen. Stat. § 49-39 that precludes the addition of other parties beyond the one-year limitation period. The statute only requires that the foreclosure action be "commenced" within one-year of when the lien was perfected. CT Wallingford seeks to import such a limitation by arguing that the foreclosure is not "commenced" as to it until CT Wallingford is served with the foreclosure complaint. Put another way, CT Wallingford views the time requirements of the statute as a statute of limitations that each individual defendant may invoke depending on their particular circumstances.
The court is not persuaded. CT Wallingford's argument ignores the primary purpose of the time limitations in the statute. "The plain intent of this statute is to clear title to the premises unless an action of foreclosure is brought within the time limited for continuance of the lien." (Internal quotation marks omitted.) Diamond National Corp. v. Dwelle, supra, 164 Conn. 543. As our Supreme Court said just one year after Diamond National Corp.: "[t]he language upon which the plaintiff relies clearly establishes a procedure for clearing the land records of mechanic's liens which are no longer in force, a procedure perfectly in keeping with the policy behind limitations on mechanic's liens, namely, to keep the title to land free of incumbrances [sic]." (Emphasis added.) Connecticut Steel Co. v. National Amusements, Inc., supra, 166 Conn. 262. Clearing the title only occurs if no foreclosure is brought within the prescribed time period. As the court went on to say in Diamond National Corp., "[t]he lien of the defendant and the liens of others who failed to commence any action of foreclosure within the time limited by the statute, are no longer in force; as liens they have ceased to exist." (Emphasis added; internal quotation marks omitted). 164 Conn. 543.
Applying this rule, a lien, as to which any timely foreclosure action is brought, continues to exist. Such a lien still has legal force. There is nothing in the statute, or in the case law interpreting it, to suggest that the lien may be extinguished as to some parties, but not all. Nor does such an interpretation make sense, because it would not accomplish the purpose of the limitation, namely, clearing title to the property. The time limitation in the statute is, therefore, properly interpreted as a limit on the right to bring the foreclosure action at all, not as a statute of limitation that only some defendants may invoke. In fact, the court in Diamond National Corp. specifically held that the time limits in the statute are conditions on the right to bring the action, not a statute of limitation. Id., 545.
This conclusion is further buttressed by reading § 49-39 in relation to Conn. Gen. Stat. § 49-30. Section 49-30 provides: "When a mortgage or lien on real estate has been foreclosed and one or more parties owning an interest in or holding an encumbrance on such real estate subsequent or subordinate to such mortgage or lien has been omitted or has not been foreclosed of such interest or encumbrance because of improper service or process or for any other reason, all other parties foreclosed by the foreclosure judgment shall be bound thereby as fully as if no such omission or defect had occurred and shall not retain any equity or right to redeem such foreclosed real estate. Such omission or failure to properly foreclose such party or parties may be completely cured and cleared by deed or foreclosure or other legal proceedings to which the only necessary parties shall be the party acquiring such foreclosure title, or his successor in title, and the party or parties thus not foreclosed, or their respective successors in title."
As our Appellate Court explained: "[t]he purpose of § 49-30 is to provide a cure in the event that a party is omitted from foreclosure proceedings." Federal Deposit Ins. Corp. v. Bombero, 37 Conn.App. 764, 769, 657 A.2d 668 (1995), appeal dismissed, 236 Conn. 774, 674 A.2d 1324 (1996). Thus, "[t]he task of the court [under § 49-30] is a narrow one, and essentially consists of examining the record or taking evidence to answer two questions: 1) Was there an omitted party, and, if so, 2) under the circumstances of the first foreclosure, would the party's interest or encumbrance have been foreclosed in the original action?" American Business Credit v. Cancellaro, 2003 Ct.Sup. (LOIS) 3186, 3188, 34 Conn. L. Rptr. 237 (Conn.Super.Ct., March 11, 2003, Pittman, J.).
The plain language of § 49-30 makes clear that the cure remedy it provides applies to foreclosures of both mortgages and liens. Thus, the statute makes clear that if Cosenza had never named CT Wallingford as a defendant, and prevailed on its foreclosure claim as to the other defendants, it could then bring an action under § 49-30 against CT Wallingford. If it did so, it would assert the same claim of priority it is asserting against CT Wallingford in the amended cross-complaint. It makes little sense to say that Cosenza can pursue its claim after it has judgment, but cannot name CT Wallingford as party in the case, to pursue the exact same claim, before judgment enters. Yet, that would be the net effect if the court accepts CT Wallingford's construction of § 49-39.
CT Wallingford attempts to avoid this incongruity by arguing that it could raise, as a defense to a § 49-30 action, Cosenza's failure to meet the time limitations in bringing the original foreclosure action against CT Wallingford. Allowing such a defense though would almost entirely negate the remedial purpose of § 49-30. To take advantage of that statute, as interpreted by CT Wallingford, Cosenza would have to not only bring its foreclosure action against the other defendants within a year of perfecting its lien, but would have to, during that same one-year period: 1) obtain judgment in its favor; 2) secure title to the property; 3) discover that a party was omitted from the original foreclosure action; and 4) start the omitted party action. While it might be theoretically possible to do all of this in a year, it is not reasonable to conclude that the legislature intended to impose such a Herculean task on mechanic's lienors in order to take advantage of what is clearly a remedial statute. This is particularly true given that nothing in the language of the statute even remotely hints at a time limitation on bringing an omitted party action. The much more logical reading of the statute is that a party who has foreclosed its mechanic's lien, but omitted a party when doing so, may bring an action under § 49-30 against the omitted party, regardless of whether that action is brought within one year of when the lien was perfected.
Given this interpretation of § 49-30, CT Wallingford's interpretation of § 49-39 would lead to absurd results. Applying CT Wallingford's analysis of § 49-39 to the facts of this case, the court would have to dismiss Cosenza's claim against CT Wallingford, making it an omitted party under § 49-30. Cosenza could then proceed with its foreclosure as to the other defendants. If it is successful, Cosenza could then start a § 49-30 action against CT Wallingford and raise the same exact claim it is asserting against CT Wallingford in the amended cross-complaint. Such a convoluted procedure would serve no purpose, other than to multiply the legal proceedings necessary to determine the parties' respective interests in the property.
Put another way, given the court's conclusion as to the interpretation of § 49-30, under CT Wallingford's analysis of § 49-39, Cosenza would be better off not adding an omitted party it discovers while the foreclosure action is pending. Instead, in order to avoid a motion to dismiss, it would wait until the foreclosure is done, and then start a new action under § 49-30. Again, no purpose is served by such machinations. If anything, the omitted party is only worse off by having its day in court unnecessarily delayed.
The court will not conclude that the legislature intended to create such a procedural quagmire. To the contrary, "[i]n construing a statute, common sense must be used, and courts will assume that the legislature intended to accomplish a reasonable and rational result." Stoni v. Wasicki, 179 Conn. 372, 376-377, 426 A.2d 774 (1979). Consequently, the more reasonable interpretation of § 49-39, in light of § 49-30, is that all the lienor is required to do within one year of perfecting its lien is to commence the foreclosure action. If it does so, it can add additional defendants during the proceedings. If it does not discover an additional party until after the foreclosure is complete, it can then bring an omitted party action under § 49-30. However, if the lienor fails to commence its foreclosure action within one year, it can bring neither a foreclosure under § 49-39, nor an omitted party action under § 49-30, because the latter is premised on a judgment having entered in the former. This reading of the two statutes together leads to a consistent and harmonious statutory framework. As such, the court is required to apply this interpretation, and reject that offered by CT Wallingford.
Furthermore, the interpretation offered by CT Wallingford is inconsistent with the remedial purpose of the mechanic's lien statute. As noted above, the statute is to be liberally construed, so long as doing so does not "depart from reasonable compliance with specific terms of the statute." Thompson and Peck, Inc. v. Division Drywall, Inc., supra, 241 Conn. 376. The court's interpretation in no way relieves Cosenza from complying with the specific terms of § 49-39. The statute required Cosenza to commence its foreclosure action within one year of when it perfected its lien. It is undisputed that it did so. Thus, the court's interpretation of the statute is consistent with the plain language of the statute, and, at the same time, follows our Supreme Court's directive to interpret the statute liberally to achieve its remedial purpose.
Finally, CT Wallingford's argument that it was not timely named in a notice of lis pendens is equally unavailing. As noted above, Cosenza timely filed its original notice of lis pendens. The notice complied with Conn. Gen. Stat. § 52-325 in that it contained "the names of the parties" then in the action. When Cosenza's cross-complaint was amended to add CT Wallingford as a defendant, Cosenza filed a Second Supplemental Notice of Lis Pendens naming all of the parties to the First Amended Cross-Complaint, including CT Wallingford. Given that the court has already determined that it was permissible for Cosenza to add CT Wallingford as a party to the action, Cosenza could not be expected to do anything more than it did with respect to naming CT Wallingford in the notice of lis pendens.
The court notes that there is an apparent contradiction in rulings of the Appellate Court as to whether actual notice of an action to foreclose a mechanic's lien vitiates the requirement under Conn. Gen. Stat. § 49-39 that a proper notice of lis pendens be filed. Compare H.G. Bass Associates, Inc. v. Ethan Allen, Inc., 26 Conn.App. 426, 431-32, 601 A.2d 1040 (1992) (filing required even though there was actual notice), with First Constitution Bank v. Harbor Village Ltd. Partnership, 37 Conn.App. 698, 703-05, 657 A.2d 1110, cert. denied, 235 Conn. 902, 665 A.2d 901 (1995) (nonconformity with filing requirements excused where there was actual notice). Because the court finds that Cosenza has complied with the statutory requirement it need not address how this apparent inconsistency in rulings should be resolved.
CT Page 23278