Opinion
No. CV 09 6001852
May 31, 2011
MEMORANDUM OF DECISION RE MOTION TO STRIKE
The plaintiff, Keith Smith Holding Co. (hereinafter "plaintiff"), has filed a motion to strike all of defendant, Avico Enterprises, LLC (hereinafter "Avico"), four revised special defenses and count one of its counterclaim. In its motion to strike, the plaintiff contends that Avico does not have the legal standing to contest the validity of the underlying judgments in this foreclosure action and the issue of whether there are "multiple judgments" in this case.
Procedural Background
The plaintiff is in the business of breeding, feeding, raising and supplying hatching eggs for the poultry industry. On or about January 28, 2004, the plaintiff and Pureline Genetics, LLC (hereinafter "Pureline") entered into an agreement for the plaintiff to provide certain poultry production services to Pureline. Pursuant to the agreement, Pureline was to promptly pay for the services the plaintiff rendered. Pureline breached the agreement and, as of November 2008, the plaintiff was owed $813,910.72.
Due to Pureline's failure to pay for the services provided by the plaintiff, on November 18, 2008, the plaintiff instituted an action against Pureline in the 3rd Division of the Circuit Court of Garland County in the State of Arkansas (hereinafter "the Arkansas Action") Pureline was duly served with notice of the Arkansas Action. On December 22, 2008, the Arkansas Court entered judgment in favor of the plaintiff and against Pureline in the amount of $813,930.89 (hereinafter "Arkansas Judgment"). Pureline did not appear and defend the Arkansas Action or otherwise raise any defense to the plaintiff's claim. Pureline was duly given notice of the Arkansas Judgment. Thereafter, based upon additional promises to pay, the plaintiff provided eggs to Pureline and invoiced Pureline in the amount of an additional $50,000.00.
Avico was not a party to this action.
Despite assurances, Pureline failed to pay the plaintiff in full for services, including the additional eggs. Consequently, the plaintiff filed an application for prejudgment remedy in the Superior Court for the Judicial District of New London at New London on January 8, 2009 (hereinafter "CT Action"). The court granted an ex-parte prejudgment remedy attachment on January 22, 2009. On January 26, 2009, an attachment was duly recorded on the property owned by Pureline located at 329 Stetson Road, Brooklyn, Connecticut (hereinafter "Property"). Again, Pureline raised no defenses to the CT Action.
The prejudgment remedy was granted ex-parte based in part upon affidavits evidencing that Avico's principal, Gis Schimmel, and Pureline intended to transfer the property to Avico despite knowledge of Keith Smith's pending claims.
While the CT Action was pending and before any final judgment was rendered, on January 9, 2009, Keith Smith sought to domesticate the judgment obtained in the Arkansas Action by filing a motion for summary judgment in the Superior Court for the Judicial District of New London at New London (hereinafter "Domestication Action"). The court granted the plaintiff's motion for summary judgment on February 9, 2009 in the amount of $831,930.89. On March 11, 2009, Keith Smith recorded a valid judgment lien certificate on the Property.
The Domestication Action bears Docket No. KNL-CV-09-5010189-S.
Subsequently, on June 2, 2009, the court entered a judgment in the CT Action in the amount of $955,578.06 (hereinafter "CT Judgment") and, on June 9, 2009, the plaintiff recorded a valid judgment lien certificate on the Property. The CT Judgment Lien related back to the date of the January 9, 2009 attachment by operation of law. As noted above, the amount awarded in the CT Action included damages for services not included in the Arkansas Judgment. Pureline was noticed with the Arkansas Judgment Lien and the CT Judgment Lien and has failed to raise any objections thereto. Instead, Pureline purported to transfer its interest in the Property to Avico. The deed of transfer to Avico was recorded on the land records on February 17, 2009.
See C.G.S. § 52-380a.
On or about September 23, 2009, the plaintiff released the Arkansas Judgment Lien because it was instituted after the CT Action and did not include sums for the services later performed by Keith Smith for Pureline on January 2, 2009.
On or about November 6, 2009, the plaintiff instituted the instant action to foreclose upon the CT Judgment Lien. Thereafter, Avico asserted four revised special defenses based upon several legal theories: the CT Judgment Lien is void, res judicata bars foreclosure and lack of standing to foreclose. Avico also filed a two-count counterclaim seeking to quiet title and for a declaratory judgment that its interest in the Property supercedes Keith Smith's CT Judgment Lien.
The plaintiff, thereafter, amended its complaint to include a claim of fraudulent transfer against both defendants. Avico admits that the Property was conveyed for the sole consideration of $170,000.00 while the Town of Brooklyn has assessed the Property for approximately $965,000.00.
Law Re Motion to Strike
A motion to strike is the proper vehicle through which a party may contest the legal sufficiency of the allegations of any counterclaim or special defense. Practice Book §§ 10-39(a)(1) and (5). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." Faulkner v. United Techs. Corp., 240 Conn. 576, 588 (1977) (internal citations omitted) (emphasis added.) In fact, "[a] motion to strike is properly granted if the [pleading] alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix Med. Sys., Inc. v. BOC Group, Inc., 224 Conn. 210, 215 (1992). "The legal conclusions or opinions stated in the special defense are not deemed admitted, but rather must flow from the subordinate facts provided." County Fed. Sav. Loan Ass'n v. Eastern Assocs., 3 Conn.App. 582, 586 (1985).
"The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." Grant v. Bassman, 221 Conn. 465, 472-73 (1992); Practice Book § 10-50. A special defense that fails to state a claim upon which relief may be granted must be stricken. Aetna Cas. Sur. Co. v. Torrado, 1992 Conn.Super. LEXIS 3061 (Oct. 29, 1992) [ 7 Conn. L. Rptr. 825]. A motion to strike may also properly be used to challenge the legal sufficiency of a counterclaim. Fairfield Lease Corp. v. Romano's Auto Service, 4 Conn.App. 495, 496, 495 A.2d 286 (1985). A legally insufficient counterclaim also must be stricken. Wells Fargo Bank Minn. v. Handy, 2003 Conn.Super. LEXIS 578 (Feb. 25, 2003).
ANALYSIS
In its motion to strike the defendant Avico's four revised special defenses and count one of its counterclaim, the plaintiff argues that Avico lacks standing to attack the underlying judgment that gave rise to the judgment lien and that neither the "law of multiple judgments" nor the doctrine of res judicata applies here. Avico's four special defenses and first count of its counterclaim are premised on the argument that the underlying action against Pureline in the New London Superior Court is void. Avico also claims that res judicata bars the plaintiff from foreclosing on the judgment lien.
With respect to plaintiff's first ground in its motion to strike, that Avico lacks standing to attack the validity of the underlying judgment, the Supreme Court case Shaskan v. Waltham Industries Corp., 168 Conn. 43, 357 A.2d 472 (1975) is on point. In Shaskan, a creditor attempted to attack the validity of liens attached to a property by other creditors by claiming that the procurement of these other liens violated the constitutional rights of the debtor. The court held that the creditor lacked standing because none of its rights had been invaded. "We find no authority . . . in which a creditor . . . has standing to attack the attachments and judgments predicated thereon by seeking to stand in [the debtor]'s shoes." Id., 50. In Shaskan, the creditor argued that its rights would be affected if the other creditors' attachments and liens were allowed to stand because their existence determines the amount of proceeds it would be entitled to after the judicial sale of the property. The court rejected that argument in holding that the creditor lacked standing because its rights were not invaded. Here, even if there could have been an argument challenging the validity of the Connecticut action that gave rise to the judgment lien because of the prior Arkansas action based on "multiple judgments" or res judicata, the only entity whose rights would be affected is Pureline and not Avico.
Following the reasoning of Shaskan, Avico does not have standing to attack the lien and the judgment upon which it was predicated. The underlying action that led to the judgment lien in this case was a breach of contract action brought by the plaintiff against the defendant Pureline. Default judgment was subsequently entered against Pureline. This was a separate and distinct action that was reduced to a valid judgment lien. Avico was not a party to the breach of contract action and thus its rights were not affected by it.
With respect to the second ground in the plaintiff's motion to strike, that the Connecticut action is not void simply because the plaintiff pursued a similar action in Arkansas, the plaintiff is not barred from seeking two judgments so long as it does not obtain a "double recovery." "The rule precluding double recovery is a simple and time-honored maxim that [a] plaintiff may be compensated only once for his just damages for the same injury . . . Plaintiffs are not foreclosed from suing multiple defendants, either jointly or separately, for injuries for which each is liable, nor are they foreclosed from obtaining multiple judgments against joint tortfeasors . . . The possible rendition of multiple judgments does not, however, defeat the proposition that a litigant may recover just damages only once . . . Double recovery is foreclosed by the rule that only one satisfaction may be obtained for a loss that is the subject of two or more judgments." (Internal quotation marks omitted.) Chapman Lumber, Inc. v. Tager, 288 Conn. 69, 111-12, 952 A.2d 1 (2008).
Avico relies on a 1995 Superior Court case with no subsequent appellate authority and no subsequent citing references in arguing that the plaintiff's Connecticut action is a nullity because it came after the Arkansas action. In Martin v. Rothman, Superior Court, judicial district of Tolland at Rockville, Docket No. CV 89 41948 (August 24, 1995, Sferrazza, J.) [ 15 Conn. L. Rptr. 215], the court was presented with two inconsistent orders from two judges with respect to the same count in the same complaint between the same parties. "This issue appears to be one of first impression in Connecticut. Courts in other jurisdictions have considered the problem of multiple judgments and have held that the earlier judgment prevails and the later judgment is a nullity . . . The courts have reasoned that only one final judgment may be rendered in a given case, and the mere entry of a second judgment does not, per se, vacate the earlier judgment."
The present case is easily distinguishable from the holding in Martin because there were two separate actions in two different courts. There has been only one final judgment in each case. There is not a "multiple judgment" problem because there were two separate actions between the plaintiff and Pureline. The "multiple judgment" issue arose in Martin because there was more than one purportedly "final" judgment rendered in the case.
The final issue to be resolved is if the doctrine of res judicata prevents the plaintiff from enforcing the judgment lien procured in the Connecticut action. "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 and their privies in all other actions in the same or any other judicial tribunal 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." (Internal quotation marks omitted.) Powell v. Infinity Ins. Co., 282 Conn. 594, 600, 922 A.2d 1073 (2007). "It is well established that res judicata and collateral estoppel are affirmative defenses that may be waived if not properly pleaded." Singhaviroj v. Board of Education, 124 Conn.App. 228, 233, 4 A.3d 851 (2010).
Thus, there may have been a valid argument that res judicata barred the Connecticut action. Even if the Connecticut action was based on the same claim as the Arkansas action, however, (something that the plaintiff explicitly denies), this is a defense that needed to be raised by Pureline in the underlying Connecticut action. Avico was not a party to either the Arkansas action or the Connecticut action. Procedurally, the Appellate Court has held that a defendant cannot collaterally attack the underlying judgment in an action to foreclose a judgment lien. "Our courts have inherent authority to open, correct and modify judgments, but this authority is restricted by statute and the rules of practice . . . For a trial court to open or set aside a default judgment, a motion to open or a motion to set aside must be filed within four months of the date judgment is rendered." (Citation omitted.) Connecticut National Bank v. Oxenhandler, 30 Conn.App. 541, 546, 621 A.2d 300, cert. denied, 225 Conn. 924, 625 A.2d 822 (1993). Thus neither defendant can attack the underlying default judgment on the ground of res judicata in this foreclosure action. Avico's special defenses must be stricken because each defense fails to set forth legally cognizable defenses to this foreclosure proceeding. Avico cannot collaterally attack the underlying judgment as void.
As to count one of the counterclaim, Avico claims that the CT Judgment "is void since the latter judgment is a nullity when multiple judgments occur." As stated above, although a party may not collect twice for the same claim, multiple judgments to secure payment of damages suffered are not prohibited. Chapman Lumbar, Inc. v. Tager, supra. Furthermore, Avico cites no Connecticut statute or common-law authority in support of its claim to the contrary. The plaintiff has the right to proceed to judgment of foreclosure.
Order
It is hereby ordered that the defendant, Avico's, four special defenses and count one of the counterclaim are hereby stricken.