Opinion
CV186035027S
10-12-2018
Patrick RIDER v. Brian RIDER, Executor of the Estate of Leigh Rider
UNPUBLISHED OPINION
Cosgrove, J.
INTRODUCTION
The defendants in this case, Brian Rider as Executor of the Estate of Leigh Rider, Lake Williams Campground Association, Inc. (the Association), Lake Williams Campground, Inc., Brian Rider as Conservator of the Estate of Leigh Rider, Brian Rider, attorney Charles Houlihan, and attorney Franklin Pilicy move to dismiss this action on the ground that the court lacks subject matter jurisdiction because the plaintiff lacks standing. In support of these motions to dismiss, the defendants requested that this court take notice of the plaintiff’s filings in his Chapter 7 Bankruptcy proceeding in the United States Bankruptcy Court for the District of Connecticut, case no. 14-21583. In those filings, the plaintiff did not list his claim of an ownership interest, legal or equitable, in Unit #1 of the Lake Williams Campground. The defendants further claim that proceedings in the Probate Court, regarding, inter alia, Unit #1, and the plaintiff’s failure to perfect appeals from those Probate Court orders, bar the claims in this litigation.
In response, the plaintiff, inter alia, produced evidence that the Bankruptcy proceeding previously referenced was reopened upon motion of the plaintiff on May 23, 2018. The plaintiff also moved to cite in the Trustee of his Bankruptcy Estate as an additional plaintiff in this action. The plaintiff further argues that counts three through eight of his complaint sound in fraud that the defendants perpetrated subsequent to his Bankruptcy filing in 2014.
The gravamen of the plaintiff’s complaint is that, in 2009, he had an agreement with his father, Leigh Rider, individually and in his capacity as the sole member of Lake Williams Campground, LLC, for the conveyance of Unit #1 in the Lake Williams Campground. The father failed to perform his agreement with the plaintiff and while the father was under a conservatorship Unit #1 and other lots were conveyed, with Probate Court approval, to the Association.
THE COMPLAINT
In this action, the plaintiff, Patrick Rider, alleges the following facts in his complaint against the defendants.
In 2009, Leigh and Sandra Rider owned a unit, known as Unit #1, of the Lake Williams Campground, located in Lebanon, Connecticut. They wanted to make the plaintiff a member of the Association’s Board of Directors and take over the Association’s financial affairs. The Association’s bylaws required all board members to own a unit of the campground. To that end, Leigh and Sandra Rider represented to the plaintiff that they would transfer title of Unit #1 to him in exchange for his agreement to become a board member for at least two years. The plaintiff accepted the offer. Subsequently, Leigh Rider represented to the plaintiff that he conveyed title of Unit #1 to the plaintiff.
Sandra Rider passed away sometime after 2009 and is not a party to this action.
Nevertheless, in January 2016, the plaintiff discovered he was not the owner of record of Unit #1 because the quitclaim deed from Leigh Rider to the plaintiff was never recorded. The plaintiff subsequently brought an action to establish quiet title or, alternatively, an equitable lien to the unit. See Rider v. Rider, Superior Court, judicial district of New London, Docket No. CV-17-6029789-S.
While that action was pending, Leigh Rider filed a petition for voluntary conservatorship with the Connecticut Probate Court for the North Central District. The Probate Court granted the conservatorship, appointing Brian Rider as conservator. Leigh Rider subsequently requested for a release, terminating the conservatorship on September 28, 2017.
Nevertheless, on September 10, 2017, Brian Rider entered into a written agreement with the Association to sell Leigh Rider’s properties. Unit #1 was not included in the sale. On September 11, 2017, Brian Rider filed a motion to approve the sale, which the Probate Court approved on September 27, 2018. On that day, Brian Rider executed a deed as conservator for Leigh Rider, conveying Unit #1 to the Association. The deed was witnessed and notarized by attorney Houlihan, witnessed by attorney Pilicy, and recorded on September 28, 2018.
On October 14, 2017, the plaintiff and Leigh Rider reached an agreement where Leigh agreed to convey Unit #1 to the plaintiff, who agreed to withdraw the action against Leigh Rider. The deed conveying Unit #1 was recorded.
According to the court’s file, which the court takes judicial notice of; see Hryniewicz v. Wilson, 51 Conn.App. 440, 444, 722 A.2d 288 (1999); the plaintiff withdrew the 2017 action on October 23, 2017. Although he filed a motion to vacate the withdrawal on January 3, 2018, the court denied the motion.
On November 24, 2017, the plaintiff received a letter from the Association, stating that the Association owned Unit #1 and recorded an affidavit of facts to that effect.
The plaintiff subsequently commenced this action by way of a complaint dated May 9, 2018. The complaint alleges eight counts: quiet title, equitable lien, fraud as to Brian Rider as conservator, fraud as to attorney Houlihan, fraud as to attorney Pilicy, accessory to fraud as to the Association, breach of fiduciary duty as to Brian Rider, and declaratory judgment.
On June 6, 2018, Brian Rider (for himself and as executor and conservator) and Lake Williams Campground, Inc. filed a motion to dismiss the complaint (#103), accompanied by a memorandum of law and exhibits, on the ground of lack of subject matter jurisdiction. On June 6, 2018, attorney Houlihan filed a motion to dismiss (#106), accompanied by a memorandum of law, on the same ground. On June 13, 2018, attorney Pilicy filed a motion to dismiss (#112), accompanied by a memorandum of law, on similar grounds. On July 25, 2018, the plaintiff filed his objection (#113), accompanied by a memorandum of law and exhibits, to the motions to dismiss. On August 6, 2018, the court heard oral argument at short calendar.
DISCUSSION
A motion to dismiss shall be used to assert lack of subject matter jurisdiction. Practice Book § 10-30(a)(1). "[A] motion to dismiss ... properly attacks the 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." (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). "The subject matter jurisdiction requirement may not be waived by any party, and also may be raised by a party, or by the court sua sponte, at any stage of the proceedings, including on appeal." Peters v. Dept. of Social Services, 273 Conn. 434, 441, 870 A.2d 448 (2005). "[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).
"Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy." (Internal quotation marks omitted.) Ganim v. Smith & Wesson Corp., 258 Conn. 313, 347, 780 A.2d 98 (2001). "[L]ack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts." (Internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 651, 974 A.2d 669 (2009). "[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).
The defendants’ main argument is that the court lacks subject matter jurisdiction because the plaintiff lacks standing because he failed to disclose his interest in Unit #1 when he voluntarily declared bankruptcy in 2014. Accordingly, his interest in Unit #1 remains with his bankruptcy trustee, who possess the sole right to exercise that interest, but is not a party to this action. The plaintiff responds, admitting the bankruptcy trustee is the proper party but asserting that it may be brought in as a party to the present action.
The defendants also raise claims of res judicata and the plaintiff’s lack of privity to a contract. Those claims are inappropriate on a motion to dismiss. Labbe v. Pension Commission, 229 Conn. 801, 816, 643 A.2d 1268 (1994). Rather, those claims are properly raised through a motion for summary judgment. Geremia v. Geremia, 1 59 Conn.App. 751, 771 n.15, 125 A.3d 549 (2015).
The court, however, disagreed and denied the motion to add the trustee as a party on August 21, 2018 (#116.01).
"Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate." 11 U.S.C. § 554(d) (2012). "Commencement of a bankruptcy proceeding creates an estate that comprises all legal or equitable interests of the debtor in property as of the commencement of the case ... The debtor must file a formal statement with the Bankruptcy Court including a schedule of his or her assets and liabilities ... The assets, which become the property of the bankruptcy estate, include all causes of action belonging to the debtor that accrued prior to the filing of the bankruptcy petition ... A cause of action becomes a part of the bankruptcy estate even if the debtor fails to schedule the claim in his petition ... [Property] that is not formally scheduled is not abandoned and therefore remains part of the estate ... Courts have held that because an unscheduled claim remains the property of the bankruptcy estate, the debtor lacks standing to pursue the claims after emerging from bankruptcy, and the claims must be dismissed." (Citations omitted; internal quotation marks omitted.) Assn. Resources, Inc. v. Wall, 298 Conn. 145, 164-65, 2 A.3d 873 (2010).
"[I]t is a basic tenet of bankruptcy law ... that all assets of the debtor, including all pre-petition causes of action belonging to the debtor, are assets of the bankruptcy estate that must be scheduled for the benefit of creditors ..." (Internal quotation marks omitted.) Beck & Beck, LLC v. Costello, 178 Conn.App. 112, 117, 174 A.3d 227 (2017), cert. denied, 327 Conn. 1000, 176 A.3d 555 (2018). "[W]here a debtor fails to list a claim as an asset on a bankruptcy petition, the debtor is without legal capacity to pursue the claim on his or her own behalf post-discharge ... This is so regardless of whether the failure to schedule causes of action is innocent." (Internal quotation marks omitted.) Id., 118.
In the present case, the plaintiff lacks standing. In his 2014 bankruptcy petition, the plaintiff never disclosed his actual or potential interest in Unit #1. Schedule A of the petition demands that each petitioner "list all real property in which the debtor has any real, legal, equitable, or future interest ... Include any property in which the debtor holds rights and powers exercisable for the debtor’s own benefit." The plaintiff did not list any properties that he owned or had any interest in. His amendments to his petition also do not list any holdings or interests. According to his own complaint, the plaintiff was aware of his potential interest in Unit #1 in 2009, and exercised ownership of the unit, five years before the filing of his bankruptcy petition. "When the debtor knows of the existence of [an] asset and expects to receive it, he or she should schedule it. A debtor has a duty to prepare schedules carefully, completely, and accurately." (Internal quotation marks omitted.) Tilley v. Anixter, Inc., 332 B.R. 501, 509 (D.Conn. 2005). Accordingly, the plaintiff had a duty to disclose his interest in Unit #1. His failure to do so means his trustee possesses the claim, not him. Further, the plaintiff has not presented any order from the Bankruptcy Court allowing him to pursue his claim independently.
The court takes judicial notice of the bankruptcy petition. See Montanaro v. Gorelick, 73 Conn.App. 319, 326 n.12, 807 A.2d 1083 (2002).
Even if the plaintiff honestly forgot to disclose his interest, such forgetfulness does not save the plaintiff’s claim. See Beck & Beck, LLC v. Costello, supra, 178 Conn.App. 118. The plaintiff’s failure to disclose his interest in Unit #1 is fatal to his claim now. See Gladstein v. Goldfield, Superior Court, judicial district of Fairfield, Docket No. CV-09-5027412-S (October 30, 2013, Hartmere, J.), aff’d, 163 Conn.App. 579, 137 A.3d 60 (2016), appeal dismissed, 325 Conn. 418, 159 A.3d 661 (2017).
Further, the reopening of the plaintiff’s bankruptcy case on May 23, 2018, which the plaintiff admitted at oral argument and submitted an exhibit to that effect, does not change this conclusion. "If the outcome of the bankruptcy case is a discharge or its functional equivalent, then an unscheduled claim remains the property of the bankruptcy estate, the debtor lacks standing to pursue the claims after emerging from bankruptcy, and the claim must be dismissed." (Internal quotation marks omitted.) Fortier v. White Flower Farms, Inc., Superior Court, judicial district of Litchfield, Docket No. CV-14-6010958-S (November 21, 2014, Marano, J.) (59 Conn.L.Rptr. 331, 332-33). In other words, once a debtor fails to disclose an asset in his or her bankruptcy petition, the debtor may not claim such asset after discharge of the debt regardless if the debtor reopens the petition. Here, according to the docket report from the bankruptcy court, the court issued an order discharging the plaintiff’s debt on November 19, 2014 and closed the case on December 10, 2014. Thus, the plaintiff’s reopening does not change the fact that he lacks standing to pursue his claimed interest in Unit #1.
As an aside, an issue raised at oral argument was whether the reopening of the bankruptcy action stayed this action. "[A] section 362 stay freezes in place all proceedings against the debtor ..." (Emphasis added; internal quotation marks omitted.) Astoria Federal Mortgage Corp. v. Genesis Holdings, LLC, 159 Conn.App. 102, 113, 122 A.3d 694 (2015). "Section 362 by its terms only stays proceedings against the debtor. The statute does not address actions brought by the debtor which would inure to the benefit of the bankruptcy estate." (Emphasis omitted; internal quotation marks omitted.) Jones v. Burr Roofing Co., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-87-0089548-S (November 19, 1992, Sylvester, J.); accord DiLieto v. County Obstetrics & Gynecology Group, Superior Court, judicial district of Waterbury, Docket No. CV-97-0150435-S (February 29, 2000, Sheldon, J.) (26 Conn. L. Rptr . 276, 277). Thus, there is no stay in this action.
CONCLUSION
Therefore, the defendants’ motions to dismiss (#103, #106, #112) for lack of subject matter jurisdiction are granted.