Opinion
No. CV-02-0099504
March 17, 2004
MEMORANDUM OF DECISION RE MOTION TO DISMISS
The plaintiff filed a three-count complaint against the defendants, Great Atlantic Pacific Tea Company (Great Atlantic), Building One Service Solutions (Building One) and Carlos Fagundes (Fagundes). In each count, the plaintiff alleges negligence against each of the defendants, respectively, for injuries allegedly sustained as a result of a fall at an AP Super Food Mart on December 26, 2000. On November 25, 2002, Building One filed notice of its filing of a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. On the same date, the plaintiff moved to default Fagundes for failure to appear, but the clerk declined to enter the default, having noticed a discrepancy between the address listed in the summons and complaint and that listed in the marshal's return. On December 11, 2002, Building One filed a motion to stay the proceedings until the Bankruptcy Court removed the automatic stay pursuant to 11 U.S.C. § 362, which motion was granted by the court, Aurigemma, J, on February 24, 2003.
The defendant Great Atlantic Pacific Tea Company is licensed to conduct business in the state of Connecticut as Waldbaum's Supermarket, which is also known as AP Super Food Mart. The defendant owns AP Super Food Mart.
d/b/a Fagundes Cleaning Service.
Docket No. 02 43582. The bankruptcy petition was filed by Encompass Services Corporation. Building One is a subsidiary of Encompass and is listed as an affiliated debtor in the bankruptcy petition.
On July 31, 2003, Fagundes' attorney entered an appearance, and the next month he filed a motion to dismiss based on insufficiency of process. Fagundes claims that he does not reside at the address where the marshal made service of process, that service of process was thus insufficient, and that, therefore, the court does not have jurisdiction over him. Great Atlantic opposes the motion to dismiss on the grounds that, first, the bankruptcy stay prohibits this court from ruling on the motion to dismiss until the automatic stay is lifted by the Bankruptcy Court, and also that before the motion can be decided, an evidentiary hearing is needed to determine Fagundes' usual place of abode.
The marshal's return provides in relevant part that "on the 14th day of September 2002, I left a verified true and attested copy of the original WRIT, SUMMONS, COMPLAINT and STATEMENT OF AMOUNT IN DEMAND at the usual place of abode of the within named defendant CARLOS FAGUNDES d/b/a Fagundes Cleaning Service at 64 Glendale Avenue, First Floor, in the Town of Hartford."
This motion to dismiss involves the intricacies of the Federal Bankruptcy Code. Great Atlantic's opposition raises the issue of whether the automatic stay in bankruptcy extends to a nondebtor codefendant. As it is a threshold matter, the court must first address the issues raised by Great Atlantic concerning the effect of the bankruptcy petition and the automatic stay on the motion to dismiss before addressing the need for an evidentiary hearing.
Fagundes argues that the automatic stay in bankruptcy pursuant to 11 U.S.C. § 362(a) is limited to actions taken against the bankrupt debtor and does not extend to nonbankrupt codefendants such as himself and Great Atlantic. Thus, Fagundes argues that the court may decide the motion to dismiss because it does not involve the bankrupt debtor, Building One.
Great Atlantic counters that the automatic stay in bankruptcy precludes the court from taking any action in this case where Building One, as the bankrupt debtor, is a named codefendant. Great Atlantic argues that any action taken by this court in ruling on the motion to dismiss could lead to dismissing Fagundes as a defendant, which would constitute the continuation of a judicial action against the bankrupt debtor, Building One, in violation of the automatic stay. Furthermore, Great Atlantic argues that ruling on the motion to dismiss would be akin to an act to collect, assess or recover a claim against the debtor.
"The automatic stay . . . has been described as one of the fundamental debtor protections provided by the bankruptcy laws." Midatlantic Nat. Bank v. New Jersey D.E.P., 474 U.S. 494, 503, 106 S.Ct. 755, 88 L.Ed.2d 859 (1986). A debtor who has filed a bankruptcy petition obtains an automatic stay of proceedings for "the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title . . ." 11 U.S.C. § 362(a)(1). "The scope of the automatic stay is extremely broad, and should apply to almost any type of formal or informal action against the debtor or the property of the estate." (Internal quotation marks omitted.) In re Ormond Beach Associates Ltd. Partnership, 185 B.R. 408, 412 (Bankr.D.Conn. 1995); see also L. King, 3 Collier on Bankruptcy (15th Ed. Rev. 2002) § 362.03. "The States cannot, in the exercise of control over local laws and practice, vest state courts with power to violate the [automatic stay]." Kalb v. Feuerstein, 308 U.S. 433, 439, 60 S.Ct. 343, CT Page 4436 84 L.Ed. 370 (1940).
With respect to codefendants, "[t]he stay of litigation does not protect nondebtor parties who may be subjected to litigation for transactions or events involving the debtor . . . [A] suit against a codefendant is not automatically stayed by the debtor's bankruptcy filing." 3 Collier on Bankruptcy, supra, § 362.03[3][d]. "[The automatic stay] pursuant to § 362(a) [is] limited to debtors and do not encompass non-bankrupt co-defendants . . . Chapter 11, unlike Chapter 13, contains no provision to protect non-debtors who are jointly liable on a debt with the debtor." (Citations omitted.) Teachers Ins. Annuity Ass'n of America v. Butler, 803 F.2d 61, 65 (2d Cir. 1986). As a general rule, the federal courts follow this rule that the nondebtor codefendant is not protected by the automatic stay in bankruptcy. See In re Delta Air Lines, 310 F.3d 953, 956 (6th Cir. 2002) ("the automatic stay does not halt proceedings against solvent codefendants"); Croyden Associates v. Alleco, Inc., 969 F.2d 675, 677 (8th Cir. 1994) (automatic stay is not available to nonbankrupt codefendants); Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1205 (3rd Cir. 1991) ("the automatic stay is not available to non-bankrupt co-defendants of a debtor even if they are in a similar legal or factual nexus with the debtor"); Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983) ("[n]o such shield is provided Chapter 11 co-debtors by § 362(a)"); Austin v. Unarco Industries, Inc., 705 F.2d 1, 4 (1st Cir.), cert. dismissed, 463 U.S. 1247, 104 S.Ct. 34, 77 L.Ed.2d 1454 (1983) ("the automatic stay of all proceedings against bankrupt debtors provided by § 362(a) of the Bankruptcy Code . . . applies only to the debtor and not to the debtor's solvent co-defendants"); Pitts v. Unarco Industries, Inc., 698 F.2d 313, 314 (7th Cir. 1983) ("clear language of Section 362(a)(1) . . . extends the automatic stay provision only to the debtor filing bankruptcy proceedings and not to nonbankrupt co-defendants"). Likewise, the Appellate Court of this state has stated that, "the filing of a bankruptcy petition does not stay actions against nondebtors." Krondes v. O'Boy, 69 Conn. App. 802, 809, 796 A.2d 625 (2002).
Chapter 13 of the Bankruptcy Code contains provisions for the stay of an action against a codebtor. "[A] creditor may not act, or commence or continue any civil action, to collect all or any part of a consumer debt of the debtor from any individual that is liable on such debt with the debtor, or that secured such debt . . ." 11 U.S.C § 1301(a).
The federal courts, however, have extended the automatic stay to nondebtor codefendants in unusual circumstances. The leading case discussing the extension of the automatic stay to nondebtor codefendants is A.H Robins Co., Inc. v. Piccinin, 788 F.2d 994 (4th Cir.), cert. denied, 479 U.S. 876, 107 S.Ct. 251, 93 L.Ed.2d 177 (1986). The A.H. Robins Co. case involved a number of product liability lawsuits filed against the manufacturer of the Dalkon Shield. Id., 996. More than half of the lawsuits named A.H. Robins as the defendant, while the remaining lawsuits named additional codefendants. Id. During the pendency of the lawsuits, A.H. Robins filed for bankruptcy protection under Chapter 11, thus staying any and all proceedings against it. Id. A number of plaintiffs in the lawsuits sought to sever their claims against A.H. Robins in order to proceed against the other codefendants. Id. In A.H. Robins Co., the codefendants were "entitled to indemnification by the debtor under the corporate by-laws . . . [and] additional insureds under the debtor's insurance policy." Id., 1007. The court in A.H. Robins Co. determined that in this unusual circumstance, a nonbankrupt codefendant is protected by the automatic stay. "[W]hen there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor . . . such a situation would be a suit against a third party who is entitled to absolute indemnity by the debtor on account of any judgment that might result against them in the case." Id., 999.
The Dalkon Shield is an intrauterine contraceptive device.
The unusual situation outlined by A.H. Robins is inapplicable here, where there is no identity of interest between Building One and Fagundes. To the contrary, the plaintiff's negligence complaint relies upon each defendant's own breach of duty. Furthermore, the court's ruling on the motion to dismiss will not act as a judgment or finding against the debtor. Fagundes' motion to dismiss is based on insufficiency of process, and ruling on it in his favor would only have the effect of removing him as a party to the litigation.
The court notes that in its motion to implead, Building One alleges that it is entitled to indemnification from Fagundes, pursuant to a contract entered into between the two parties. Building One alleges that Fagundes was to defend and indemnity Building One for any acts of negligence by Fagundes or any of its agents. This alleged indemnification clause does not rise to the level of an "unusual circumstance," as contemplated in A.H. Robins Co. In A.H. Robins Co., the codefendants were entitled to indemnity by the bankrupt codefendant. In this case, Fagundes, as the codefendant, is not entitled to indemnity. Rather, Building One, as the bankrupt debtor is entitled to indemnity by Fagundes.
Nonetheless, Great Atlantic argues that the automatic stay in bankruptcy applies equally to the codefendants. It contends that a ruling on the motion to dismiss would effectively be a continuation of the judicial proceeding against the debtor codefendant, Building One, and a violation of the automatic stay. Great Atlantic relies heavily on Pope v. Manville Forest Products Corp., 778 F.2d 238 (5th Cir. 1985), as support for its argument. In Pope, the plaintiff filed a Title VII action against the defendant in the western district of Louisiana. Id. The district court action was automatically stayed because the defendant filed a bankruptcy petition. Id. Thereafter, the Title VII action was transferred to the bankruptcy court. Id. The bankruptcy court allowed the plaintiff's claim in the amount of $0. Id. The district court, upon learning of the bankruptcy court decision, dismissed the action, sua sponte, on the ground of res judicata. Id. The plaintiff appealed the district court's decision. Id., 239. On appeal, the Fifth Circuit Court of Appeals reversed the judgment of dismissal, holding that:
the stay, by its statutory words, operates against the commencement or continuation of judicial proceedings. No specific reference is made to dismissal of judicial proceedings. Nevertheless, it seems . . . that ordinarily the stay must be construed to apply to dismissal as well. First, if either of the parties takes any step to obtain dismissal, such as a motion to dismiss or motion for summary judgment, there is clearly a continuation of the judicial proceeding. Second, in the more technical sense, just the entry of an order of dismissal, even if entered sua sponte, constitutes a judicial act toward the disposition of the case and hence may be construed as a continuation of a judicial proceeding. Third, dismissal of a case places the party dismissed in the position of being stayed to continue the judicial proceeding, thus effectively blocking his right to appeal. Thus, absent the bankruptcy court's lift of the stay, or perhaps a stipulation of dismissal, a case such as the one before us must, as a general rule, simply languish on the court's docket until final disposition of the bankruptcy proceeding. Id.
In Pope, unlike the present case, there were no codefendants named in the action. Pope involved an action in which there was one plaintiff and one defendant, the debtor in bankruptcy. The Pope court determined that any action taken by a court in a proceeding against a bankrupt defendant would arguably be a continuation of the proceeding, and therefore a violation of the automatic stay in bankruptcy. The Pope court extended the word "action," as used in § 362(a), to include dismissing a case. While it may be true in Pope that dismissing a case would constitute the court's taking action against the bankrupt defendant, such is not the case with the present motion to dismiss, which was filed by a codefendant to remove himself from the action filed by the plaintiff because of insufficiency of process. The court, by addressing the motion to dismiss, is not taking any action against the bankrupt codefendant Building One.
Based on the foregoing reasons, the court concludes that the automatic stay does not extend to the nonbankrupt codefendants, at least under the circumstances presented by this case. Any action taken by this court, in addressing the merits of the motion to dismiss, does not constitute the continuation of a proceeding against the debtor, Building One, in violation of the automatic stay in bankruptcy. This court may therefore move on to address the merits of the motion to dismiss.
"[A]ny defendant, wishing to contest the court's jurisdiction, may do so even after having entered a general appearance, but must do so by filing a motion to dismiss within thirty days of the filing of an appearance." (Internal quotation marks omitted.) Pitchell v. Hartford, 247 Conn. 422, 432, 722 A.2d 797 (1999). "[Practice Book § 10-30] specifically and unambiguously provides that any claim of lack of jurisdiction over the person as a result of an insufficiency of service of process is waived unless it is raised by a motion to dismiss filed within thirty days in the sequence required by Practice Book § 10-6 . . ." (Emphasis in original.) Id., 433. "Facts showing the service of process in time, form, and manner sufficient to satisfy the requirements of mandatory statutes in that regard are essential to jurisdiction over the person." (Emphasis in original; internal quotation marks omitted.) Bridgeport v. Debeck, 210 Conn. 175, 179-80, 554 A.2d 728 (1989), appeal dismissed, 216 Conn. 824, 582 A.2d 203 (1990). "One who is not served with process does not have the status of a party to the proceeding . . . A court has no jurisdiction over persons who have not been made parties to the action before it." (Internal quotation marks omitted.) Exley v. Connecticut Yankee Greyhound Racing, Inc., 59 Conn. App. 224, 234-35, 755 A.2d 990, cert. denied, 254 Conn. 939, 761 A.2d 760 (2000).
"In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Dyous v. Psychiatric Security Review Board, 264 Conn. 766, 773, 826 A.2d 138 (2003). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where . . . 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).
Preliminarily, it is important to note that Fagundes's motion to dismiss is properly before this court. Fagundes filed an appearance on July 31, 2003 and filed his motion to dismiss based on insufficiency of service on August 25, 2003. He argues that service in this case failed to comply with General Statutes § 52-54, in that he does not reside at the address listed in the marshal's return and that the failure to leave a copy of the summons and complaint at his usual place of abode results in a complete failure to acquire jurisdiction over him. He has filed his own affidavit and that of the owner of the property where abode service was made, both to the effect that he did not reside at the address listed in the marshal's return.
Section 52-54 provides that "[t]he service of a writ of summons shall be made by the officer reading it and the complaint accompanying it in the hearing of the defendant or by leaving an attested copy thereof with him or at his usual place of abode. When service is made by leaving an attested copy at the defendant's usual place of abode, the officer making service shall note in his return the address at which such attested copy was left."
The plaintiff counters that the court should either deny Fagundes's motion or schedule an evidentiary hearing. He argues that what constitutes Fagundes's usual place of abode is a question of fact and has submitted his attorney's affidavit to the effect that the place where the marshal made service on Fagundes was based on an address listed with the Department of Motor Vehicles. The plaintiff suggests that this factual dispute can only be resolved by conducting an evidentiary hearing.
General Statutes § 52-57(a) provides that "[e]xcept as otherwise provided, process in any civil action shall be served by leaving a true and attested copy of it, including the declaration or complaint, with the defendant, or at his usual place of abode, in this state." (Emphasis added.) "[W]hether a particular place is the usual place of abode of defendant is a question of fact. Although the sheriff's return is prima facie evidence of the facts stated therein, it may be contradicted and facts may be introduced to show otherwise." Tax Collector of New Haven v. Stettinger, 79 Conn. App. 823, 825, 832 A.2d 75 (2003). "The usual place of abode is usually considered to be the place where a person is living at the particular time when service is made." (Internal quotation marks omitted.) Collins v. Scholz, 34 Conn. Sup. 501, 503, 373 A.2d 200 (1976).
On a motion to dismiss, "[t]he general rule putting burden of proof on the defendant as to jurisdictional issues raised is based on the presumption of the truth of the matters stated in the officer's return. When jurisdiction is based on personal or abode service, the matters stated in the return, if true, confer jurisdiction." (Internal quotation marks omitted.) Knipple v. Viking Communications, Ltd., 236 Conn. 602, 607 n. 9, 674 A.2d 426 (1996); citing Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 53, 459 A.2d 503 (1983). "[W]hen issues of fact are disputed [however] due process requires an evidentiary hearing, with the opportunity to present evidence and cross-examine witnesses." (Internal quotation marks omitted.) Bradley's Appeal from Probate, 19 Conn. App. 456, 467, 563 A.2d 1358 (1989); see also Standard Tallow Corp. v. Jowdy, supra, 56.
In the present case, the court cannot conclude from the papers submitted whether the address listed in the marshal's return is Fagundes's usual place of abode. A Standard Tallow hearing is necessary in order to provide the court with the ability to make the factual findings necessary to rule on the motion to dismiss. The Clerk is therefore directed to schedule such an evidentiary hearing at a time convenient to the parties and the court.
Jonathan E. Silbert, Judge