Opinion
CV166031492
03-20-2017
Ion Bank fka Naugatuck Savings Bank v. J.C.C. Custom Homes, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS #103
Barbara Brazzel-Massaro, J.
I. INTRODUCTION
The plaintiff initiated this replevin action by way of writ, summons, and complaint dated June 13, 2016 with a return date of August 7, 2016. The plaintiff named as defendants, J.C.C. Custom Homes, LLC (Custom Homes), Rock On Excavation Services, LLC, John Ciapetta, and Dawn Ciapetta. Service of process was made on the defendants on July 1, 2016. On August 17, 2016, the plaintiff filed an amended complaint substituting Nutmeg Financial Holdings, LLC (Nutmeg) as the plaintiff to this replevin action. On October 14, 2016, the defendant filed a motion to dismiss. On November 18, 2016, the plaintiff filed an objection to the motion to dismiss. The matter was heard at short calendar on December 5, 2016.
II. FACTUAL BACKGROUND
The plaintiff has alleged the following facts in its complaint. On December 29, 2010, the plaintiff, Ion Bank, and the defendant J.C.C. Custom Homes, executed a Commercial Promissory Note (Note). The defendant promised to pay the sum of $170,000 including interest and other late charges, if necessary, no later than January 1, 2016. The plaintiff also agreed to provide security for the note. The plaintiff obtained a lien on equipment including, (1) a 2004 Ford F 350 pickup; (2) a 1989 East dump trailer; (3) a 1981 Kenworth W900 tractor; and (4) a 1998 Caterpillar 416. As additional security, the plaintiff was provided with three separate guaranty agreements, whereby, each guarantor (remaining individual defendants in this action) guaranteed the defendant Custom Homes' obligations under the note. The defendant Custom Homes has since failed to make the required payments and has defaulted on its obligations of the note. On June 30, 2016, the plaintiff assigned the note to Nutmeg. On August 16, 2016, the plaintiff assigned the security agreements and guarantees to Nutmeg. The plaintiff alleges that despite demand, the defendants have failed to pay the amount due and owing under the note. The plaintiff filed this replevin action as a result of the failure to pay by the defendant.
III. DISCUSSION
" A motion to dismiss . . . properly attacks jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Cox v. Aiken, 278 Conn. 204, 210-11, 897 A.2d 71 (2006); see also Kozlowski v. Commissioner of Transportation, 274 Conn. 497, 501, 876 A.2d 1148 (2005); Filippi v. Sullivan, 273 Conn. 1, 866 A.2d 599 (2005). Pursuant to Practice Book § 10-31 in relevant part, " [t]he motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter . . ."
" It is a fundamental rule that a court may raise and review the issue of subject matter jurisdiction at any time . . . Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction . . ." (Internal quotation marks omitted.) Ferguson Mechanical Co. v. Dept. of Public Works, 282 Conn. 764, 770-71, 924 A.2d 846 (2007). " A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014). " [I]n determining whether a court has jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Connor v. Statewide Grievance Committee, 260 Conn. 435, 443, 797 A.2d 1081 (2002).
In the present action, the defendant contends that the motion to dismiss should be granted for the following reasons: (1) the court lacks subject matter jurisdiction because the plaintiff does not have standing since it was not the holder of the note nor entitled to enforce the note at the commencement of this action; (2) the present replevin action is barred by the prior pending action doctrine because the plaintiff initiated a foreclosure action on the same debt prior to initiating this replevin action. In response, the plaintiff argues that it does not lack standing to bring the subject suit for the following reasons: (1) pursuant to the assignment of the note, Nutmeg has the right to collect under the note or bring an action to enforce the security on the note under Connecticut statute and common law; (2) the plaintiff, as assignor of the note, can pursue this replevin action in its name; and (3) the plaintiff has exercised its right to substitute Nutmeg, the assignee of the defendants' debt, as the plaintiff within the proper time frame. The plaintiff further contends that the prior pending action doctrine does not bar the present action because the two actions are separate and distinct: the alleged prior pending action is a suit for foreclosure of the mortgage on real estate, an action in equity, and the present action is a suit to replevy personal property, an action in law.
On the issue of whether the prior pending action doctrine bars the present replevin action, the plaintiff is correct in stating that the replevin action is distinct and separate from the foreclosure action, and thus this replevin action is not barred. See Ceci Bros., Inc. v. Five Twenty One Corp., Superior Court, judicial district of Stamford, Docket No. CV-96-0150073-S (May 17, 1996, Tobin, J.) (16 Conn.L.Rptr. 595, ) (" The replevin action" is to recover identified goods, an action of a wholly different character and purpose than a foreclosure action). Therefore, the motion to dismiss is not granted on this argument.
" [B]ecause the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss." Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012). " The proper procedural vehicle for disputing a party's standing is a motion to dismiss." (Internal quotation marks omitted.) D'Eramo v. Smith, 273 Conn. 610, 615 n.6, 872 A.2d 408 (2005). " If . . . the plaintiff's standing does not adequately appear from all materials of record, the complaint must be dismissed." (Footnote omitted; internal quotation marks omitted.) Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).
" [Standing to enforce [a] promissory note is [established] by the provisions of Uniform Commercial Code . . . Under [the Uniform Commercial Code], only a holder of an instrument or someone who has the rights of a holder is entitled to enforce the instrument . . . The holder is the person or entity in possession of the instrument if the instrument is payable to bearer . . . When an instrument is endorsed in blank, it becomes payable to bearer and may be negotiated by transfer of possession alone." (Internal quotation marks omitted.) BAC Home Loans Servicing, LP v. Farina, 154 Conn.App. 265, 269, 107 A.3d 972 (2014), cert. denied, 316 Conn. 908, 111 A.3d 884 (2015). The mortgage securing the repayment of a promissory note follows the note, " pursuant to which only the rightful owner of the note has the right to enforce the mortgage." Bankers Trust Co. of California, N.A. v. Vaneck, 95 Conn.App. 390, 391, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006).
In the present case, the plaintiff assigned the subject note to Nutmeg on June 30, 2016, then commenced this action by service of process on July 1, 2016. At the commencement of this suit, the plaintiff was not the holder of the subject note in accordance with the Uniform Commercial Code, and thus did not have the right to enforce the mortgage. Accordingly, the plaintiff lacks standing to bring this replevin action.
The plaintiff cites to several cases for the proposition that " the assignee can, as at common law, if he owns the chose in action, bring suit in the name of the assignor, as still holding legal title thereto." Smith v. Waterbury & Milldale Tramway Co., 99 Conn. 446, 451, 121 A. 873 (1923). These cases, however, are not relevant to this action. Under these cases, the assignee may bring an action in the name of the assignor, connoting that Nutmeg can bring an action in the plaintiff assignor's name, or sue under its own name. However, the plaintiff gave up all of its rights, title, and interest in the note to Nutmeg on June 30, 2016, and did not have standing to commence suit itself. Nevertheless, at the time the matter of subject jurisdiction was raised, the action was being maintained by the plaintiff and not the purported assignee, Nutmeg. See Communications Systems, Inc. v. Farmington Four Partners, Superior Court, judicial district of Hartford, Docket No. CV-90-0383972-S (March 16, 1998, Rittenband, J.) (21 Conn.L.Rptr. 465, ).
Smith involved a partial transfer of the assignor's interest, the assignor still retaining an interest. See Communications Systems, Inc. v. Farmington Four Partners, Superior Court, judicial district of Hartford, Docket No. CV-90-0383972-S (March 16, 1998, Rittenband, J.) (21 Conn.L.Rptr. 465, 467 n.5, at *8). In Newman v. Gaul, 102 Conn. 425, 129 A. 221 (1925), the assignor retained all interest when commencing suit, later assigning its interest in the claim and judgment to the assignee. In the present case, the plaintiff assigned the entirety of its interest to Nutmeg prior to commencing suit and did not retain any interest when commencing suit.
The plaintiff further contends that by virtue of Practice Book § 10-59, the plaintiff has exercised its right to substitute Nutmeg as the plaintiff within the proper time frame. Under General Statutes § 52-109, however, a plaintiff may be substituted in an action only if the court is " satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as a plaintiff." See also Practice Book § 9-20." " [U]nder § 52-109, substitution is permitted only when the trial court determines that the action was commenced in the name of the wrong plaintiff through mistake . . . [The Supreme Court] has stated that once a determination is made . . . the substituted party is let in to carry on a pending suit, and is not regarded as commencing a new one. After he is substituted he is . . . treated and regarded for most purposes just as if he had commenced the suit originally. The writ, the complaint, the service of process, attachment made, bonds given, the entry of the case in court, the pleadings if need be, in short all things done in the case by or in favor of the original plaintiff . . . remain for the benefit of the plaintiff who succeeds him, as if done by and for him originally and just as if no change of parties had been made. So far as the defendant is concerned, the same suit upon the same cause of action, under the same complaint and pleadings substantially in most cases, goes forward to its final and legitimate conclusion as if no change had been made." (Citations omitted, internal quotation marks omitted.) DiLieto v. County Obstetrics & Gynecology Group, P.C., 297 Conn. 105, 151-52, 998 A.2d 730 (2010), overruled on other grounds by Fairfield Merrittview Ltd. Partnership v. Norwalk, 320 Conn. 535, 553-54 n.21, 133 A.3d 140 (2016). In the present case, Nutmeg was not validly substituted as a plaintiff to this replevin action and did not make a motion to substitute upon which the trial court could make a determination.
Practice Book § 10-59 states that: " [t]he plaintiff may amend any defect, mistake or informality in the writ, complaint or petition and insert new counts in the complaint, which might have been originally inserted therein, without costs, during the first thirty days after the return day."
Fairfield overruled DiLieto on the definition of " mistake." DiLieto defined " mistake" as " an honest conviction, entertained in good faith and not resulting from the plaintiff's own negligence that she is the proper person to commence [the action]." See DiLieto v. County Obstetrics & Gynecology Group, P.C., supra, 297 Conn. 151. Fairfield held that " mistake" should be construed " in its ordinary sense, rather than as connoting an absence of negligence." See Fairfield Merrittview Ltd. Partnership v. Norwalk, supra, 320 Conn. 554 n.21. In this analysis, this court does not cite Dilieto for the definition of mistake, but rather for the proposition that a trial court must determine whether a plaintiff can be substituted in to an action, which proposition has not been challenged by any subsequent case law.
IV. CONCLUSION
Because the plaintiff was not the holder of the subject note at the commencement of this action, the plaintiff lacks the standing to bring this suit. The defendants' motion to dismiss as to the plaintiff's amended complaint is granted.