Opinion
No. CV980409683S.
November 27, 2006.
MEMORANDUM OF DECISION
The plaintiff files this motion to dismiss the defendants' application for a writ of audita querela on the ground that this court lacks subject matter jurisdiction. The defendants filed a memorandum in opposition.
FACTS PROCEDURAL HISTORY
On February 18, 1998, the original plaintiff, Frank Verderame, brought this action against the defendants, Trinity Estates Development Corp. (TEDCO) and James R. McMahon II, on a $400,000 promissory note. On November 5, 2004, Judge Hadden issued a memorandum of decision, in which the court entered a judgment against the defendants for an outstanding balance of $143,000 on the note plus interest and attorneys fees.
The following facts and procedural history, as set forth by Judge Hadden in his memorandum of decision, are relevant to this decision. The defendant McMahon was the president of TEDCO which was involved in the development of residential building lots. From 1994 through 1996, TEDCO was developing two projects on land on Laurel Street in East Haven and the so-called Lasalette Estates in North Branford.
On September 2, 1994 the defendants borrowed $400,000 from Frank Verderame; MoMahon signed a promissory note on behalf of TEDCO and individually and delivered it to Frank Verderame. The note was secured by a mortgage on the East Haven property and recorded on the East Haven land records. Both parties believed that another mortgage securing the $400,000 note was recorded on the North Branford property, but such a mortgage was not offered into evidence. The plaintiff did not seek to foreclose on either property. The note provided for monthly interest of $8,000 beginning October 1, 1994.
On February 1, 1995, Frank Verderame and TEDCO entered into another agreement, which stated that the $400,000 debt was secured by a mortgage dated September 2, 1994, that Frank Verderame was entitled to receive $50,000 upon the sale of each of the three lots in Lasalette Estates which he had released from the mortgage on January 30, 1995, and that Frank Verderame was to be paid an additional $200,000 at the time of the closings on the next four subdivision lots. On February 14, 1995, the defendants borrowed $380,000 from Frank Verderame and delivered a promissory note to him, which was secured by a mortgage on both the East Haven and North Branford properties. TEDCO made four payments of $50,000 each to Frank Verderame on May 16, 1995, March 27, 1996, April 6, 1996, and October 10, 1996, and a payment of $57,000 on July 12, 1995, after each lot in Lasalette Estates was sold.
On November 22, 1996, TEDCO signed a quitclaim deed, conveying all of its interest in the East Haven property to Frank Verderame. This deed stated that the consideration was one dollar and other good and valuable consideration and that it was a deed in lieu of foreclosure. The quitclaim deed also stated that the property was subject to all mortgages recorded in the East Haven land records, including the February 14, 1995 and September 2, 1994 mortgages to Frank Verderame.
On February 18, 1995, Frank Verderame brought this action to collect on the $400,000 note. On June 10, 1998, he filed a motion for judgment by default. His motion included an affidavit of debt stating that principal balance in the amount of $124,000 and interests on the $400,000 note remained unpaid. The court did not, however, treat the defendants as defaulted parties. Frank Verderame died on May 1, 1999, and Anthony Verderame, the executor of his father's estate, was substituted as plaintiff.
This matter was tried in December 2003. At trial, Judge Hadden considered two primary issues. One issue was what payments, if any, were made by the defendants on the $400,000 note. While the plaintiff claimed that no payment had been made, the defendants claimed that they had paid $257,000 on the principal and had made all interests payments until October 11, 1996. The second issue was what consideration TEDCO had received when it gave the quitclaim deed of the East Haven property to Frank Verderame on November 22, 1996.
As to the first issue, the court determined that five payments totaling $257,000 by the defendants to Frank Verderame were payments made on the $400,000 note, but that no interest payments were made on that note. At trial, the defendants offered five checks totaling $257,000 as evidence showing payments to Frank Verderame. The defendants claimed that the plaintiff's affidavit of debt showing a principal balance of $124,000 plus interest proved that payments were made on the $400,000 note. In response, the plaintiff claimed that $257,000 was given in payment on the $380,000 note and Frank Verderame must have mistakenly thought that this action was on the $380,000 note. The court found that, although Frank Verderame was mistaken as to the amount of the balance due, he credited the amount of $257,000 as payment on the $400,000 note. The court found, however, that no interest payments were made on the $400,000 note because the defendants failed to provide any evidence showing the specific amounts paid for interest. In a supplemental memorandum of decision issued on December 6, 2004, Judge Hadden found that the total judgment against both defendants was $589,330.50. On April 22, 2005, Judge Hadden corrected the total judgment against both defendants to $591,304.92.
The second issue addressed by the court was what consideration TEDCO had received for the quitclaim deed of the East Haven property. The defendants claimed that the consideration given by Frank Verderame was to forgive whatever balance was owed on the $400,000 note. The plaintiff claimed that the property was quitclaimed to Frank Verderame in exchange for Frank Verderame's payment of the tax liens on the property in the amount of $188,000.
The court decided in favor of the plaintiff because the court found the defendants' claims not credible. At trial, James McMahon III, the defendant McMahon's son, testified that the quitclaim deed was given as payment for the balances due on the $400,000 and $380,000 mortgages on both the East Haven and North Branford properties and that the quitclaim deed was executed in full payment of a total of $480,000. When the court asked him why he did not obtain a release of the mortgages, he explained that there were threats of death and violence made against him and his family members. The defendant McMahon testified that the quitclaim deed was given to cover the balance owed on the $400,000 note and other debts and that his son had told him about the threats. The defendants offered no evidence other than the testimony of McMahon and his son to support their claims concerning the quitclaim deed. On the other hand, the plaintiff offered evidence showing that tax liens in excess of $188,000 had been filed on the East Haven property and that the quitclaim deed and releases showing payments on the tax liens were filed on the East Haven land records on December 18, 1996. The court determined that the defendants executed the quitclaim deed conveying the East Haven property to Frank Verderame in consideration of Frank Verderame's payment of the tax liens of $188,000 on the property.
On December 17, 2004, the defendants appealed this matter to the Appellate Court, which affirmed Judge Hadden's decision. The defendants argued in their appellate brief that the trial court should have credited the testimony of McMahon and his son. The Appellate Court declined to review the trial court's findings and did not even reach the merits of the defendants' claims because the defendants' brief was devoid of any legal analysis and the defendants' claims were deemed abandoned. Verderame v. Trinity Estates Development Corp., 92 Conn.App. 230, 883 A.2d 1255 (2005).
On May 1, 2006, the defendants filed an application for a writ of audita querela seeking to stay the examination of a judgment debtor. On May 23, 2006, they filed an amended application for a writ of audita querela. The amended writ contains two counts; Count One alleges ineffective assistance of counsel, and Count Two alleges that Frank Verderame's claim was fully satisfied by the sale of the East Haven property by Anthony Verderame to a third party.
Application of a writ of audita querela is analogous to filing of a post-trial motion. Therefore, the applicants are referred to as the defendants.
In their amended writ of audita querela, the defendants allege the following. On December 16, 1996, a joint venture agreement was entered into by Anderson Sunnyside Farm Associates (ASFA) and Frank Verderame Construction, Inc. (FVC) to form a joint venture known as East Haven Elderly Site, Inc. (EHES). Alice McMahon, wife of the defendant McMahon, is a 98 percent partner of ASFA, and the substitute plaintiff, Anthony Verderame, is president and owner of FVC; however, when the agreement was signed, Frank Verderame was president of FVC. Anthony Verderame is also now the president and director of EHES. In accordance with the terms of the agreement, TEDCO executed a deed in lieu of foreclosure to Frank Verderame for the East Haven property in 1996, then Frank Verderame quitclaimed the property to Anthony Verderame, and Anthony Verderame, as landlord, entered into a fifty-year ground lease of the property with EHES.
Section 5.L. of the agreement provides, in part, that "the Joint Venture assumes and agrees to pay the outstanding mortgage balances of any Fee Simple mortgages, which mortgages [Anthony Verderame] has taken subject to, and [FVC] specifically obligates itself to pay said mortgage balances .º.º." Thus the defendants argue that the $400,000 mortgage from TEDCO to Frank Verderame is covered by section 5.L. and FVC is specifically responsible for payment of the $400,000 debt. On November 10, 2005, Anthony Verderame sold the East Haven property to a third party for $3,200,000, free and clear of all encumbrances on the property. The deed was recorded on November 15, 2005 in the East Haven Land Records.
DISCUSSION
"Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). "Jurisdiction of the subject-matter is the power [of the court] to hear and determine cases of the general class to which the proceedings in question belong .º.º. A court has subject matter jurisdiction if it has the authority to adjudicate a particular type of legal controversy .º.º. [O]nce the question of lack of jurisdiction of a court is raised, [it] must be disposed of no matter in what form it is presented .º.º. and the court must fully resolve it before proceeding further with the case." (Internal quotation marks omitted.) Esposito v. Specyalski, 268 Conn. 336, 348, 844 A.2d 211 (2004). "The burden rests with the party who seeks the exercise of jurisdiction in his favor .º.º. clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Internal quotation marks omitted.) Goodyear v. Discala, 269 Conn. 507, 511, 849 A.2d 791 (2004). "When a .º.º. court decides a jurisdictional question raised by a .º.º. motion to dismiss, it must consider the allegations of the [pleading] in their most favorable light .º.º. In this regard, a court must take the facts to be those alleged in the [pleading], including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006).
The defendants argue that, in deciding whether this court has subject matter jurisdiction on this writ of audita querela, the court should not inquire into the merits of the writ. It is well established that "a motion to dismiss is not designed to test the legal sufficiency of a complaint in terms of whether it states a cause of action." Pratt v. Old Saybrook, 225 Conn. 177, 185, 621 A.2d 1322 (1993). "Where, however .º.º. the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint." (Internal quotation marks omitted.) Ferreira v. Pringle, 255 Conn. 330, 346-47, 766 A.2d 400 (2001).
In the present case, the plaintiff has included with its motion to dismiss a copy of the trial court's memorandum of decision containing the factual findings and judgments made by the court in the original action. Verderame v. Trinity Estates Development Corp., Superior Court, judicial district of New Haven, Docket No. CV 98 0409683 (November 5, 2004, Hadden, J.). For the purposes of this writ of audita querela, the facts set forth in the memorandum of decision are undisputed by the parties. Accordingly, this court may look to those undisputed facts to decide the jurisdictional issue and need not conclusively presume the validity of the allegations of the writ. This court will read the factual allegations of the defendants' writ tempered by the facts set forth in that memorandum of decision. This court will, however, construe broadly in the defendants' favor those factual allegations in the writ that are not contradicted by the memorandum of decision and presume them to be true for purposes of this motion to dismiss.
"The ancient writ of audita querela has been defined as a writ issued to afford a remedy to a defendant against whom judgment had been rendered, but who had new matter in defense (e.g., a release) arising, or at least raisable for the first time, after judgment .º.º. Because the writ impairs the finality of judgments, the common law precluded its use in cases in which the judgment debtor sought to rely on a defense such as payment or a release that he had the opportunity to raise before the entry of judgment against him .º.º. No authority has been cited to suggest that the writ of audita querela was ever available to present issues which were presented before the entry of the judgment attacked by the writ .º.º. The writ of audita querela provides relief from a judgment at law because of events occurring subsequently which should cause discharge of a judgment debtor." (Citations omitted; internal quotation marks omitted.) Ames v. Sears, Roebuck Co., 206 Conn. 16, 20-21, 536 A.2d 563 (1988).
Courts have a longstanding "general power of equity to afford relief against unreasonable conduct even when the activity is otherwise lawful." Gardiner v. Conservation Commission, 222 Conn. 98, 105, 608 A.2d 672 (1992). "[E]quity is a system of positive jurisprudence founded upon established principles which can be adapted to new circumstances where a court of law is powerless to give relief." (Internal quotation marks omitted.) Lakeview Associates v. Woodlake Master Condominium Ass'n., Inc., 239 Conn. 769, 785 n. 26, 687 A.2d 1270 (1997). However, "[a]udita querela is a limited and extraordinary legal remedy, based on equity, to inhibit the unconscionable use of a lawful judgment because of matters arising subsequent to the judgment." Knaus v. Lomas, Superior Court, judicial district of New Britain, Docket No. SPN 90 0414313 PE, H-932 (November 20, 1990, Berger, J.). "Audita querela is a remedy granted in favor of one against whom execution has issued on a judgment, the enforcement of which would be contrary to justice because of (1) matters arising subsequent to its rendition, or (2) prior existing defenses that were not available to the judgment debtor in the original action, or (3) the judgment creditor's fraudulent conduct or circumstances over which the judgment debtor had no control." Oakland Heights Mobile Park, Inc. v. Simon, 40 Conn.App. 30, 32, 668 A.2d 737 (1995).
Count One: Ineffective Assistance of Counsel CT Page 21793
The defendants first allege that they are entitled to equitable relief because the defendants' attorney, Ronald Bozelko, was ineffective in representing them in the underlying proceeding. The defendants argue that Bozelko was not prepared for trial because of his alleged alcohol problem as evidenced by Bozelko's testimony at a grievance hearing that he had an alcohol problem. The defendants argue that Bozelko was also ineffective in appealing the matter to the Appellate Court in that he waived oral argument without consulting the defendants. They further note that the Appellate Court dismissed their appeal because the defendants' brief was devoid of any legal analysis and thus their claims were deemed abandoned.The plaintiff argues that this writ should be dismissed because the court has no jurisdiction or power to reverse a civil court judgment based on ineffectiveness of counsel through a writ of audita querela. The plaintiff further argues that there is no case law upon which any civil judgment has been reversed by a claim of ineffective assistance of counsel. He argues that the defendants' request for relief from a judgment through a writ of audita querela on the ground of ineffective assistance of counsel is not equitable because they are also pursuing a remedy in a separate malpractice suit against Bozelko. Moreover, the plaintiff argues that it would be against public policy to allow such claim because this court would be required to engage in a full trial on the merits of the defendants' malpractice claim.
This court agrees with the plaintiff that the defendants are not entitled to such relief under the circumstances of this case. The defendants have cited no case to support their claim, nor has this court been able to find any in which this issue has been addressed. Accordingly, as a matter of law, the defendants cannot seek equitable relief by claiming ineffective assistance of counsel in a writ of audita querela.
Count Two: Satisfaction of Plaintiff's Claim
In the Second Count, the defendants allege that they are entitled to equitable relief because "the claim and cause of action of the plaintiff upon which this action was brought was fully settled and satisfied." They claim that the judgment was fully satisfied by the sale of the East Haven property by Anthony Verderame to a third party. The defendants argue that the sale, which occurred after the entry of the judgment in this action, triggered the plaintiff's contractual duty to pay the mortgage debt on the property, including the $400,000 note. The plaintiff argues that this court has no jurisdiction to entertain the writ of audita querela because no new matter has arisen after the judgment between the parties. The plaintiff argues that the Second Count in the writ should be dismissed because the circumstances alleged by the defendants, including the Joint Venture Agreement, existed at least ten years before the judgment, and all claims in the Second Count could have been brought during trial. The plaintiff indicates that the issue regarding the transfer of the East Haven property to Frank Verderame was fully briefed by parties, litigated and ruled upon by the court during the underlying proceeding.
The parties in this action do not dispute the proposition that "a writ of audita querela depends upon a showing of new matter in defense .º.º. arising, or at least raisable for the first time, after judgment." (Internal quotation marks omitted.) Ames v. Sears, Roebuck Co., supra, 206 Conn. 21. For this court to consider the defendants' claims in their writ of audita querela, the defendants must show that a new matter or defense arose for the first time after judgment which could not have been raised during the underlying proceeding.
In the present case, the defendants argue that the sale of the East Haven property is a new matter that occurred for the first time after judgment because the sale, which occurred after the entry of the judgment, triggered the plaintiff's duty to pay off the mortgage debt on the East Haven property, including the $400,000 note. The defendants' brief is devoid of any argument, however, as to how Anthony Verderame's obligation under the agreement affects Frank Verderame's right to collect on the promissory note. The plaintiff argues that the sale cannot be a new matter in this action because it is irrelevant to the underlying action in that Anthony Verderame's sale of the property to a third party has nothing to do with this action in which Frank Verderame alone sought to collect on the $400,000 note.
This court agrees with the plaintiff that the original plaintiff, Frank Verderame's, right to collect on the note cannot be set off by the substituted plaintiff Anthony Verderame's alleged obligation to discharge the debt under the terms of a separate contract with the defendants since Anthony Verderame was not a party to the $400,000 note. Under such circumstances, a proper remedy for the defendants would be to bring a separate action against Anthony Verderame or the joint venture, rather than to seek relief from the judgment on the note. In this action, the plaintiff chose to bring an action directly on the note rather than seeking foreclosure on the property. Anthony Verderame, who is a substituted plaintiff and executor of the estate of the deceased Frank Verderame, does not have any more rights and duties than Frank Verderame had with respect to the $400,000 note. Frank Verderame had no obligation to pay off the mortgage debt under the joint venture agreement, nor does Anthony Verderame, as far as the present action is concerned. Therefore, since section 5.L. of the Joint Venture Agreement implicates only the rights and duties of Anthony Verderame and does not affect Frank Verderame's right to collect on the note, the sale of the property by Anthony Verderame is not a new matter relevant to this action that may be raised in a writ of audita querela.
The defendants cite Anthony Julian Railroad Construction Co. v. Mary Ellen Drive Associates, 50 Conn.App. 289, 717 A.2d 294 (1998), to support their argument that the present case provides an appropriate context for the use of this writ. In Anthony Julian Railroad Construction Co., the trial court rendered a judgment of strict foreclosure of a mechanic's lien in favor of the plaintiff, who then negotiated settlements with the defendants for $325,000 in exchange for the release of the mechanic's lien. Id., 292-93. Consequently, the court held that new matters had arisen subsequent to the entry of the judgment and rendered it inequitable to allow the plaintiff to pursue collection of the judgment. Id., 293-95. That case, however, is distinguishable from the present case. In the present case after the entry of the judgment, no new event involving Frank Verderame or his estate has occurred. The defendants allege that, under the joint venture agreement, Anthony Verderame became the one that should be responsible for the mortgage debt. The defendants fail to allege, however, that Frank Verderame had any obligation to pay any debt with respect to the $400,000 note. Thus, Frank Verderame's right to satisfaction of the judgment should not be disturbed by Anthony Verderame's alleged contractual duty under the joint venture agreement.
CONCLUSION
For the foregoing reasons, the First Count in the defendants' writ is dismissed because, as a matter of law, the defendants cannot seek equitable relief by claiming ineffective assistance of counsel in a writ of audita querela. The Second Count in the writ is also dismissed because it fails to allege any new matter relevant to this action that could be raised in a writ of audita querela.
Frank S. Meadow
Judge Trial Referee