Opinion
No. CV05 400 77 49 S
July 19, 2006
MEMORANDUM OF DECISION
The issue on the defendant's motion for summary judgment is whether the plaintiff may bring a second action at law to collect on an unpaid promissory note when the plaintiff's prior foreclosure action in equity had failed.
On April 13, 2000, the defendant executed a promissory note in favor of the plaintiff and a mortgage was granted to secure the note. The defendant defaulted on the note and the plaintiff commenced a foreclosure action in May of 2001. At the foreclosure action Mr. Pluchino raised the special defenses of unclean hands and unconscionability. On September 3, 2003, the Superior Court, Judicial District of Fairfield (Stevens, J.) entered judgment in favor of the defendant, holding that the plaintiff had acted with unclean hands, unconscionably, and in violation of the Connecticut Unfair Trade Practices Act. "[T]he borrower was unsophisticated, was misled, and was unquestionably unable to comply with the terms of the note, the plaintiff has attempted to take advantage of the debtor in order to charge arbitrarily high fees as part of a transaction structured for that purpose." Monetary Funding Group, Inc. v. Pluchino, No. CV01 038 82 851S, 2003 WL 22133826 (Conn.Super. 2003). The plaintiff appealed and the Appellate Court (Schaller, J.) affirmed the decision. Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 415 (2005). The plaintiff now seeks to collect the unpaid debt by bringing an action at law. The defendant moves for summary judgment asserting that all of the issues arising out of this transaction have been adjudicated in a prior action and therefore this claim is barred by the doctrine of res judicata.
"Summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." Giglio v. American Economy Ins. Co., 278 Conn. 794 (2006), citing Orkney v. Hanover Ins. Co., 248 Conn. 195, 201 (1999). In an appropriate case, once the defense of res judicata has been raised the issue may be resolved by way of summary judgment. Labbe v. Pension Com'n of City of Hartford, 229 Conn. 801, 816 (1994), citing Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687 (1985).
Section 49-1 of the Connecticut General Statutes ("C.G.S.") states, "[t]he foreclosure of a mortgage is a bar to any further action upon the mortgage debt, note or obligation against the person or persons who are liable for the payment thereof . . ." This provision precludes the mortgagee from instituting an action at law to collect on the note after a judgment for foreclosure has been entered with the exception of a claim for a deficiency judgment. First Bank v. Simpson, 199 Conn. 368, 376 (1986). There is no disputing that a mortgagee could bring an additional claim on the note in the foreclosure action. "It is well established that a mortagagee has two separate and distinct causes of action against a defaulting mortgagor. A mortgagee may pursue an action at law for the amount due on the promissory note, or it may pursue its remedy in equity and foreclose on the mortgage . . . The mortgagee may also pursue both of these remedies simultaneously in one consolidated foreclosure suit . . ." Federal Deposit Ins. Co. v. Voll, 38 Conn.App. 198, 206 (1995), cert denied, 235 Conn. 903 (1995). However, the question remains as to whether a mortgagee may bring an action at law after failing in the prior foreclosure action. In this case, the court holds the plaintiff's claim at law is barred by the doctrine of res judicata.
The doctrine of res judicata, or claim preclusion, provides that a former judgment on a claim, if rendered on the merits, is an absolute bar to a subsequent action between the same parties or those in privity with them on the same claim. A judgment is final not only as to every matter which was offered to sustain the claim, but also as to any other admissible matter which might have been offered for that purpose . . . [citations omitted]. We have adopted a transactional test as a guide to determining whether an action involves the same claim as an earlier action so as to trigger operation of the doctrine of res judicata. The claim that is extinguished by the judgment in the first action includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose . . . [citations omitted]. In applying the transactional test, we compare the complaint in the second action with the pleadings and the judgment in the earlier action . . . [citations omitted]. We have stated that res judicata should be applied as necessary to promote its underlying purposes. These purposes are generally identified as being (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 by preventing a person from being harassed by vexatious litigation. The judicial doctrine of res judicata is based on the public policy that a party should not be able to relitigage a matter which it already has had an opportunity to litigate . . . Fink v. Golenbock, 238 Conn. 183, 191-92.
In the case at bar, the plaintiff claims that "[o]n or about April 13, 2000, the Defendant executed a promissory note payable to the order of Plaintiff in the principal amount of $25,000.00, which by its terms, was due on July 18, 2000." (Complaint, 3.)
"[O]n or about December 2002, the Plaintiff made demand on Defendant for the payment of the Note, but Defendant failed to make payment thereon, and remains wholly unpaid." (Complaint, 4.) This is the same claim made by the plaintiff in its foreclosure action, Monetary Funding Group, Inc. v. Pluchino, No. CV01 038 28 515, 2003 WL 22133826, tried before Judge Stevens. Moreover, the defendant has asserted that he will raise the same special defenses of unclean hands and unconscionability as were already raised and ruled upon in the foreclosure action.
This case is similar to Centra Mortgage Holdings, Ltd. v. Mannix, 18 F.Sup.2d 162 (D.Conn. 1998). The plaintiff in that case, like the plaintiff here, argued that C.G.S. section 49-1 permits a separate suit on the note alone as a judgment of strict foreclosure was never entered in the prior suit. Id. at 166. In response to this argument the Court stated, "[t]he fact that a party has a choice as to how to proceed should not effect the CT Page 13114 res judicata consequences of the ruling on the merits in the action it commences." Id. at 167. "[W]hile the plaintiff may be permitted to choose two different courses of action under C.G.S. section 49-1, that statute does not, by its terms, alleviate the operation of the res judicata doctrine as applied by the Connecticut state courts. Clearly, the note and mortgage at issue between these two parties are part of a single transaction or at least a series of connected transaction." Id. at 168, citing Fink, 238 Conn. at 192.
Res judicata bars litigation of any claim for relief that was available in a prior suit between the same parties or their privies, whether or not the claim was actually litigated. A first judgment will generally have preclusive effect only where the transaction or connected series of transactions at issue in both suits is the same, that is where the same evidence is needed to support both claims, and where the facts essential to the second were presented in the first. Id. at 165-66.
The plaintiff's action at law obviously involves the same transaction as the prior action in equity. The plaintiff would have to rely on the same evidence to support its claim of a defaulted note and the special defenses to these claims have already been decided. In addition, the claim for relief that the plaintiff is now seeking could have been sought in the prior suit. For these reasons, the defendant's motion for summary judgment is granted as this action is barred by the doctrine of res judicata.