Opinion
No. 473785
June 1, 2005
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT ( No. 112)
I. INTRODUCTION.
John and Frances Krenisky (the Kreniskys), the plaintiffs in the above-entitled action, have sued Fidelity Bank (Fidelity), claiming that two earlier foreclosure actions brought against them by Fidelity violated their legal rights. The Kreniskys' problem is that, while the first foreclosure action was dismissed for failure to prosecute with reasonable diligence, the second, essentially identical, action resulted in a judgment of foreclosure and was affirmed on appeal. Fidelity Bank v. Krenisky, 72 Conn.App. 700, 807 A.2d 698, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). Under these circumstances, the claims made in the present action are, with one exception, foreclosed.
II. THE PRIOR ACTIONS.
The present action was, as mentioned, preceded by two prior foreclosure actions, referred to here as Fidelity I and Fidelity II. A brief description of those actions will be helpful.
A. Fidelity I
Fidelity Bank v. Krenisky, No. 258556 (N.H.J.D. at Meriden) ( Fidelity I) was filed in the summer of 1997 with a return date of July 8, 1997. The file of this action no longer exists. The parties have, however, stipulated to its relevant contents.
The Complaint, dated June 17, 1997, consists of a single count. It alleges that on April 3, 1987, the Kreniskys entered into a note with the Connecticut Bank and Trust Co. N.A. (CBT) and secured the note with a mortgage on premises known as 512 Yale Avenue, New Haven (premises). The note and mortgage were eventually assigned to Fidelity and were claimed to be in default.
In November 1997, the Kreniskys filed an answer, denying "all the material allegations of the complaint." In addition, they filed four special defenses and three counterclaims. Special Defense #1 was that the action breached an agreement between the Kreinskys and the noteholders to pay "the taxes directly to the City of New Haven, and the note and mortgage amount to the holder." Special Defense #2 was that the action violated "the implied covenant of Good Faith and Fair Dealing." Special Defense #3 was that the action constituted "an Unfair Trade Practice, 42-110 of the Connecticut General Statutes." Special Defense #4 was that a foreclosure "would be inequitable, or unconscionable under the circumstances herein." Counterclaim # 1 was that the action violated the agreement between the Kreniskys and the noteholders. Counterclaim #2 was that the action violated "the implied covenant of Good Faith and Fair Dealing." Counterclaim # 3 was that the action constituted "an Unfair Trade Practice, 42-110 of the Connecticut General Statutes."
On June 18, 1999, the court entered a judgment of dismissal for failure to prosecute the action with reasonable diligence. On September 25, 1999, a motion to open the judgment of dismissal was denied. No appeal was taken.
B. Fidelity II
Fidelity Bank v. Krenisky, No. 432611 (N.H.J.D. April 23, 2001), aff'd, 72 Conn.App. 700, 807 A.2d 698, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002), was commenced by service of process on November 8, 1999. The file of this matter exists, and judicial notice is taken of the contents thereof. The complaint alleged that on April 23, 1987, the Kreniskys entered into a note with CBT and secured it with a mortgage on the premises. The note and mortgage were eventually assigned to Fidelity and were claimed to be in default.
On August 31, 2000, the Kreniskys filed an amended answer, special defense, and counterclaim. The amended answer admitted that the Kreniskys owned the premises, had signed the note and mortgage, and that certain subsequent claims on the premises existed. The remainder of the allegations were denied. The Kreniskys' special defenses are described by the Appellate Court "as alleging that (1) the plaintiff gave them improper notice of default, (2) they had substantially complied with the terms of the note and mortgage, (3) the plaintiff violated the principles of good faith and [fair] dealing, (4) foreclosure was inequitable under the circumstances and (5) the parties had resolved the dispute by accord and satisfaction." 72 Conn.App. at 703-04. The six-count counterclaim is described by the Appellate Court as asserting "one count alleging breach of contract, one count alleging breach of the covenant of good faith and fair dealing, three counts related to malicious prosecution and one count alleging abuse of process." Id. at 719.
"Upon the plaintiff's motion, the court struck the defendant's counterclaim, and the plaintiff filed a motion for summary judgment as to liability. Having found the defendants' special defenses to be legally insufficient, the court granted the plaintiff's motion for summary judgment. Subsequently the court ordered foreclosure by sale." 72 Conn.App. at 703.
As mentioned the judgment of the trial court was affirmed on appeal. Fidelity Bank v. Krenisky, supra.
III. THE PRESENT ACTION.
The present action was commenced by service of process on January 23, 2003. The Kreniskys are the plaintiffs, and Fidelity is the defendant. The Amended Complaint consists of eight counts. The First Count alleges that the prior actions breached both the mortgage and an accord between the parties reached on May 2, 1997. The Second Count alleges that the prior actions violated "the implied covenant of Good Faith and Fair Dealing in the note and mortgage." The Third Count alleges that Fidelity I was "maliciously brought." The Fourth Count seeks double damages for Fidelity I pursuant to Conn. Gen. Stat. § 52-568(1). The Fifth Count seeks treble damages for Fidelity I pursuant to Conn. Gen. Stat. § 52-568(2). The Sixth Count alleges that Fidelity I constituted abuse of process. The Seventh Count alleges that the prior actions breached an accord between the parties reached on May 2, 1997. (The Kreniskys concede that this claim duplicates a claim made in the somewhat more comprehensive First Count.) The Eighth Count alleges that the prior actions constituted an unfair trade practice in violation of Conn. Gen. Stat. § 42-110.
On March 10, 2005, Fidelity filed the motion for summary judgment now before the court. The motion contends that because Fidelity "has already prevailed" in Fidelity II, the Kreniskys' claims "are barred by res judicata and/or the doctrine of collateral estoppel." The motion was argued on May 31, 2005.
IV. DISCUSSION.
"It is an established rule in the administration of justice, that all controversies between parties, once litigated and fully and impartially determined, shall cease; and to that end, no fact involved in such litigated controversy, shown by the record to have been material to its determination, and to have been put at issue and decided, whether the proceeding was at law or in equity, shall again be litigated between the same parties or their privies." Munson v. Munson, 30 Conn. 425, 433 (1862).
Although this ancient statement of a still-vital rule is arguably sufficient to dispose of most aspects of the motion now before the court, it is appropriate to review the particular counts of the Kreniskys' amended complaint with the Munson rule, in its modern form, in mind.
A. First Count.
The First Count, as mentioned, alleges that the prior actions breached the mortgage and an accord between the parties reached on May 2, 1997. The accord claim is the precise claim made by the Kreniskys in the fifth special defense filed in Krenisky II. 72 Conn.App. at 718. The Krenisky II trial court's "conclusion that the fifth special defense was legally insufficient" has been affirmed on appeal as "legally and logically correct." Id. at 719. Of course, by granting a judgment of foreclosure, based on the mortgage, the court necessarily held that the foreclosure action did not violate the mortgage itself.
"The doctrine of res judicata holds that an existing final judgment rendered upon the merits without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated as to the parties or their privies in all other actions in the same or any other judicial tribunals of concurrent jurisdiction . . . If the same cause of action is again sued on, the judgment is a bar with respect to any claims relating to the cause of action which were actually made or which might have been made." Efthimiou v. Smith, 268 Conn. 499, 506, 846 A.2d 222 (2004). (Emphasis in original; internal quotation marks and citation omitted.) The purposes of this doctrine are "(1) to promote judicial economy by minimizing repetitive litigation; (2) to prevent inconsistent judgments which undermine the integrity of the judicial system; and (3) to provide repose." Id. (Emphasis in original; internal quotation marks and citation omitted.)
The allegation of accord set forth in the First Count is plainly barred by the doctrine of res judicata as it relates to Fidelity II. The doctrine of res judicata, narrowly construed, does not bar claims relating to Fidelity I since that initial action did not result in a judgment on the merits. "Claim preclusion (res judicata) and issue preclusion (collateral estoppel)" are, however, "related ideas on a continuum." Efthimiou v. Smith, supra, 268 Conn. at 506. (Internal quotation marks and citation omitted.) Collateral estoppel "is that aspect of res judicata that prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties or those in privity with them upon a different claim." Id. The causes of action asserted by Fidelity in Fidelity I and Fidelity II are, for all practical purposes, identical. The alleged accord occurred prior to the date of the complaint in Fidelity I. Given the analysis of Fidelity II, a result different from that obtained in Fidelity II could not have been obtained in Fidelity I. Under these circumstances, the doctrine of collateral estoppel bars the Kreniskys' accord claim insofar as it pertains to Fidelity I.
The preclusive effect of Fidelity II is not diminished by the fact that the Kreniskys' claim of accord was asserted in that case as a special defense. The question is whether the issues raised in the First Count "were actually litigated and necessarily determined on previous occasions." Bouchard v. Sundberg, 80 Conn.App. 180, 187, 834 A.2d 744 (2003). That question must here be answered in the affirmative. There can be no question that the claim of accord was "actually litigated" here. The Appellate Court squarely discusses it and finds no "genuine issue of material fact as to the existence of an accord between the parties." 72 Conn.App. at 719. Moreover, the issue was not only "necessarily determined" in the previous litigation. It was actually determined. Id. This is not a case like Bouchard, heavily relied upon by the Kreniskys, where the previous court did not "consider the same issues." 80 Conn.App. at 189. Nor is it a case arising under any of the "claim-splitting" exceptions enumerated in Restatement (Second) of Judgments § 26 (1982). (It is not, for example, a case in which the parties have agreed to a split claim, a case in which the court in the first action expressly reserved the right to bring the second action, or a case in which the court in the first action lacked subject matter jurisdiction to entertain the claim brought in the second action.)
The Kreniskys argue that the doctrines of res judicata and collateral estoppel should not be applied in the context of the present case because the decisions in the prior actions were made by the court rather than a jury. These distinctions are inconsequential for purposes of the doctrines in question. It is well established that these doctrines apply "whether the [prior] proceeding was at law or in equity." Munson v. Munson, supra, 30 Conn. at 433. Accord Huntley v. Holt, 59 Conn. 102, 108, 22 A. 34(1890).
B. Second Count.
The Second Count alleges that the prior actions violated the implied covenant of good faith and fair dealing. This claim was asserted in the third special defense filed in Fidelity II. 72 Conn.App. at 716. The Appellate Court held that the "special defense is legally insufficient and is not a valid or equitable defense to a foreclosure action." Id. at 717. Under these circumstances, for the reasons stated above, the claim is barred by the doctrines of res judicata and collateral estoppel.
C. Third Count.
The Third Count alleges that Fidelity I was "maliciously brought." "In a malicious prosecution or vexatious litigation action, it is necessary to prove want of probable cause, malice and a termination of the suit in the plaintiffs' favor." QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 361, 773 A.2d 906 (2001). Count three of the Kreniskys' counterclaim in Fidelity II alleged malicious prosecution. 72 Conn.App. at 720 n. 2. The trial court's striking of this counterclaim was affirmed on appeal. Id. at 721.
Assuming, for purposes of argument, that Fidelity I was terminated in the Kreniskys' favor by the judgment dismissing the action for failure to prosecute with reasonable diligence, the Kreniskys are precluded, under the circumstances, from proving either want of probable cause or malice. Fidelity II involved the same cause of action as the cause alleged in Fidelity I, and Fidelity ultimately obtained a judgment in its favor in Fidelity II. Under these circumstances, want of probable cause to bring Fidelity I cannot be established.
D. Fourth Count.
The Fourth Count seeks double damages for Fidelity I pursuant to Conn. Gen. Stat. § 52-568(1). The statutory subsection in question pertains to the commencement and prosecution of a civil action "without probable cause." This was the basis of the fourth counterclaim stricken in Fidelity II. See 72 Conn.App. at 720 n. 2. For reasons already discussed, it cannot be established that Fidelity I was commenced and prosecuted without probable cause.
E. Fifth Count.
The Fifth Count seeks treble damages for Fidelity I pursuant to Conn. Gen. Stat. § 52-568(2). The statutory subsection in question pertains to the commencement and prosecution of a civil action "without probable cause, and with a malicious intent unjustly to vex and trouble such other person." This was the basis of the fifth counterclaim stricken in Fidelity II. See 72 Conn.App. at 720 n. 2. For reasons already stated, it cannot be established that Fidelity I was commenced and prosecuted without probable cause.
F. Sixth Count.
The Sixth Count alleges that Fidelity I constituted abuse of process. "[T]he gravamen of the action for abuse of process is the use of `a legal process . . . against another primarily to accomplish a purpose for which it is not designed'; 3 Restatement (Second), Torts § 682 (1977)." Suffield Development Associates Limited Partnership v. National Loan Investors, L.P., 260 Conn. 766, 773, 802 A.2d 44 (2002). "The distinction between malicious prosecution or vexatious suit and abuse of process as tort actions is that in the former the wrongful act is the commencement of an action without legal justification, and in the latter it is in the subsequent proceedings, not in the issue of process but in its abuse." Schaefer v. O.K Tool Co., 110 Conn. 528, 532, 148 A. 350 (1930). Any prior judicial determination concerning the justification for commencing either Fidelity I or Fidelity II would not be conclusive on the issue whether abuse of process occurred during the proceedings of Fidelity I. The motion for summary judgment now before the court is grounded on claims of res judicata and collateral estoppel. Neither party has submitted affidavits concerning either abuse or lack of abuse of process occurring during the proceedings of Fidelity I. Under these circumstances, the defendant's motion for summary judgment as to the Sixth Count must be denied without prejudice to a subsequent motion accompanied by such documents as may be appropriate.
G. Seventh Count.
The Seventh Count, as mentioned, restates the claim of breach of accord set forth in the First Count. For reasons stated with respect to the First Count, the Seventh Count is precluded by the doctrines of res judicata and collateral estoppel.
H. Eighth Count
The Eighth Count alleges an unfair trade practice. The Kreniskys did not raise this particular allegation as a special defense of counterclaim in either Fidelity I or Fidelity II. As mentioned, however, Fidelity II was a successful action. The act of filing a non-sham lawsuit cannot be considered an unfair trade practice. Zeller v. Consoli, 59 Conn.App. 545, 553, 758 A.2d 379 (2000). Neither of the prior actions can be considered a sham lawsuit. Under these circumstances, summary judgment must enter as to the Eighth Count.
V. CONCLUSION.
The defendant's motion for summary judgment is granted with respect to the First, Second, Third, Fourth, Fifth, Seventh, and Eighth Counts of the Amended Complaint. It is denied without prejudice with respect to the Sixth Count.
Jon C. Blue Judge of the Superior Court