Opinion
No. CV06 5001294-S
January 27, 2009
CORRECTED DOCKET NO. MEMORANDUM OF DECISION
The instant matter is a collection action by the plaintiff, New Haven Postal E.F.C.U., hereinafter referred to as "the plaintiff," against two defendants, Brandon Constance, hereinafter referred to as "the defendant Constance"; and Guilford Automotive, LLC, hereinafter referred to as "the defendant Guilford." The matter was heard before the court, as undersigned, against the defendant Guilford only. The plaintiff also alleges that the matter is to be heard as a hearing in damages against the defendant Guilford, based upon a default for failure to plead that was entered against the defendant Guilford on February 27, 2007.
PLEADING STATUS
The undersigned finds the following facts regarding the pleading status of the instant file:
The plaintiff brought its original cause of action in two counts, against both defendants, as part of a pre-judgment remedy application, on or about October 16, 2006. The court ordered that the defendants be served on or before November 7, 2006, with a hearing date scheduled for November 13, 2006. The defendant Guilford was properly served on October 23, 2006. The court granted the pre-judgment remedy on November 23, 2006.
On or about December 18, 2006, the plaintiff filed an amended complaint, adding a third count, alleging negligence, and a fourth count, alleging breach of statutory duty pursuant to C.G.S. Sec. 14-180, against the defendant Guilford. The amended complaint, along with the prejudgment attachment order, with a return date of the 4th Tuesday in January 2007, which corresponds to January 23, 2007, were served on the defendant Guilford on January 3, 2007, and filed with the court on January 10, 2007.
The plaintiff, on about February 26, 2007, filed a motion for default for failure to plead against the defendant Guilford. On February 27, 2007, the plaintiff's motion was granted. On March 20, 2007, the plaintiff withdrew its complaint against the defendant Constance. On that same date, the plaintiff filed a purported certificate of closed pleadings and claimed the case against the defendant Guilford as a non-jury matter. On November 14, 2007, the plaintiff requested a continuance of a scheduled pretrial of the matter, noting that the plaintiff had erroneously filed the certificate of closed pleadings, and that the matter should be, instead, a hearing in damages, presumably due to the default that was granted and entered on February 27, 2007. The motion for continuance was granted by the court.
On November 15, 2007, the defendant filed an answer and special defenses to only Count Two of the plaintiff's complaint. The plaintiff filed a reply to the defendant's special defenses to that count on December 7, 2007.
On January 18, 2008, the plaintiff again filed a motion for default for failure to plead to Counts Three and Four against the defendant Guilford. The court denied the motion on January 22, 2008. The plaintiff then filed a motion for judgment, as to Count Four only, on March 21, 2008. On August 18, 2008, the defendant objected to the motion for judgment, arguing that the default for failure to plead should have been automatically vacated when the defendant filed its answer and special defenses on November 17, 2007.
DISCUSSION
It is axiomatic that, at no time, did the defendant Guilford file an answer and/or special defense to Count Four of the plaintiff's purported amended complaint, dated December 18, 2006, which was served on the defendant on January 3, 2007, and filed with the court on January 10, 2007. The issue, therefore, is whether the purported amended complaint dated December 18, 2006 was, indeed, filed as a "matter of right" within the meaning of the Practice Book, without requiring leave of court or consent, and, if it was so within the plaintiff's right, whether the default entered against the defendant is effective as to that amended complaint, and the matter should, therefore, be heard as a hearing in damages.
Practice Book Sec. 10-59 provides that a plaintiff may file an amendment "as of right" to correct any defect, mistake or informality in the writ or complaint, "and assert new counts in the complaint, which might have been originally inserted therein," during the first 30 days after the return date. Since the return date was January 23, 2007, the plaintiff had until February 22, 2007 in which to file an amended complaint "as of right" pursuant to the aforementioned Practice Book section. Therefore, the plaintiff's operative complaint, as of its motion for default for failure to plead on January 18, 2008, was the amended complaint dated December 18, 2006.
However, since the plaintiff's January 18, 2008 motion for default for failure to plead was denied, it logically follows that its March 21, 2008 motion for judgment was moot.
Similarly, the defendant Guilford's filing of its answer and special defense to count two of the original complaint operated, per the Practice Book, to set aside the default that was entered on February 27, 2007. Practice Book Sec. 17-32(b) provides that "if a party who has been defaulted under this section files an answer before a judgment after default has been rendered by the judicial authority, the clerk shall set aside the default. If a claim for a hearing in damages or a motion for judgment has been filed, the default may only be set aside by the judicial authority." Since no claim or motion was timely filed, the filing of the answer and special defenses acted to reopen the default.
Therefore, the pleadings as to Count Two of the amended complaint against the defendant Guilford were properly closed as of the time of trial, but the defendant did not file a responsive pleading to either count three or four of the amended complaint. The plaintiff's motion for default as to count four was denied, presumably applying Practice Book Sec. 10-61, which states, in relevant part, "if an adverse party fails to plead further (as herein, where there was and is no responsive pleading to counts three and/or four), pleadings already filed by the adverse party shall be regarded as applicable so far as possible to the amended pleading." Put simply, the defendant Guilford's denial of the allegations of count two of the original complaint operate under the plain meaning of Sec. 10-61 as a denial of the allegations of both count three and of count four of the amended complaint.
Based on the foregoing, the undersigned finds that there was no operative default in place against the defendant Guilford at the time of the instant hearing. Therefore, the plaintiff must prove both fault and damages to collect against this defendant.
THE PLAINTIFF'S CASE IN CHIEF AGAINST THE DEFENDANT GUILFORD
The court finds the following facts regarding liability:
On or about April 4, 2006, the defendant Constance executed and delivered a promissory note to the plaintiff in the amount of $13,383.94. At trial, the plaintiff filed an Affidavit of Debt totaling $14,592.77 against Constance. The debt was broken down as follows: $11,366.25 principal; $1,521.52 interest; $1.00 costs; $1,704.00 attorneys fees. As collateral for the loan by the plaintiff, the defendant Constance pledged a 2002 Jeep Grand Cherokee, bearing vehicle identification number 1J4GW48592C104931. The defendant Guilford, which had sold the aforementioned vehicle to Constance, admitted, through its principal, George Anastasio, that it failed to register the motor vehicle with the plaintiff's lien recorded on it.
DISCUSSION
In its amended complaint, dated December 18, 2006, the plaintiff alleges that, while the defendant Constance defaulted on its loan obligation to the plaintiff, the defendant Guilford's failure to register the motor vehicle with the plaintiff's lien recorded on it, which failure the defendant Guilford admits due to an alleged back tax due on the part of the defendant Constance, was a breach of the defendant Guilford's statutory duty to the plaintiff pursuant to C.G.S. Sec. 14-180. Both parties agree that the defendant Guilford was not a party to the loan contract between the plaintiff and the defendant Constance. The plaintiff alleges a cause of action for negligence and/or breach of statutory duty, and seeks monetary and treble damages.
C.G.S. Sec. 14-180 provides that a dealer, such as the defendant Guilford, who transfers a vehicle to another person other than by the creation of a security interest, "shall promptly execute the assignment and warranty of title by a dealer, showing the names and addresses of the transferee and of any lien holder holding a security interest created at the time of the resale and the date of such lien holder's security agreement, in the spaces provided therefore on the certificate or as the commissioner prescribes, and mail or deliver the certificate or statement to the commissioner with the transferee's application for a new certificate." (Emphasis added.)
The defendant Guilford argues that C.G.S. Sec. 14-196 provides the sole remedy for a lien holder such as the plaintiff, who has suffered damages by a car dealer, such as the defendant Guilford's, non-compliance with Sec. 14-180. C.G.S. Sec. 14-196 provides in relevant part: General Statutes § 14-196 provides in relevant part: "(b) A person who: (2) willfully fails to mail or deliver a certificate of title or application to the commissioner within ten days after the time required by this chapter . . . or (4) willfully violates any provision of this chapter, except as provided in subsection (a) of this section, shall be fined not more than one thousand dollars or imprisoned not more than two years, or both."
The undersigned has been unable to locate any Connecticut case law interpreting the relationship between § 14-196 and/or § 14-180 in this context. However, the court is persuaded that an analogous interpretation may be found in Connecticut Bank Trust Co. v. Stephen Pontiac-Cadillac, Inc., 5 Conn. Cir.Ct. 491, 257 A.2d 510 (1968). There, the court considered General Statutes § 14-171, which, like both §§ 14-180 and 14-196, is part of the Uniform Motor Vehicle Certificate of Title and Anti-Theft Act (Uniform Act), adopted verbatim by the Connecticut legislature in 1957. Id., at 494-95.
General Statues § 14-171 governs applications for the first certificate of title obtained in Connecticut. Relevant to the issues contained the instant matter, the statute provides: "(b) If the application refers to a vehicle purchased from a dealer, it shall contain the name and address of any lien holder holding a security interest created or reserved at the time of the sale and the date of such security agreement and be signed by the dealer as well as the owner, and the dealer shall promptly mail or deliver the application to the commissioner."
In Connecticut Bank Trust Co., the facts were very similar to the instant action. The defendant, a car dealer, helped procure financing for a buyer who wished to purchase a new car from the dealer. Id., at 492-93. The financing was obtained from the plaintiff, a bank, who reserved a security interest in the car. The dealer then prepared the application for the certificate of title, but "failed to protect the bank's security interest by making a notation of its lien on the application." Id. at 493.
As a result, the Commissioner of Motor Vehicles mailed the buyer a certificate of title that did not show the lien. Eventually, the buyer defaulted on his payments to the bank, but before the bank could recover the car through a replevin action, the buyer resold the car to a third party free of the bank's lien. At that point, the bank filed suit against the dealer for negligence in that it breached its statutory duty found in § 14-171(b), and the trial court ultimately ruled in its favor. Id. at 494.
On appeal, the Court upheld the trial court's ruling. Id., at 497, noting that because General Statutes § 14-175 required that when the commissioner of motor vehicles was satisfied with the application he must then mail the certificate of title "to the first lien holder named in it or, if none, to the owner, § 14-171 was a lien holder's only method of protection." Id., 496. The Circuit Court concluded that "[i]t was the dealer who set in motion the chain of events resulting in the bank's loss," and that "[i]n this kind of transaction the bank's reliance on the dealer was justified." Id., at 497.
It has been held that a lien holder's cause of action for a dealer's failure to adhere to the provisions of § 14-171(b) would sound in negligence, not contract. "The plaintiff cites no authority for the proposition that . . . § 14-171(b) creates a contractual duty between the lien holder and the dealer. There is none. An action brought under . . . § 14-171(b) would sound in negligence. That statute creates a duty in the dealer to note on the application for title the existence of a lien holder interest . . . A breach of that duty and injury resulting is actionable. Such an action would sound in negligence." Navy Federal Credit Union v. Perugini, Docket No. CV 96 0564376 (March 12, 1999, Hennessey, J.), Judicial District of Hartford.
Case law from other jurisdictions reveals the same analysis and findings. A New York court considering a statutory negligence claim for the breach of a duty created by that jurisdiction's equivalent to Connecticut General Statutes § 14-171(b) essentially reached the same result as that reached by the Circuit Court in Connecticut Bank Trust Co. In Security Trust Company of Rochester v. Valley Cadillac Corp., 91 Misc.2d 511, 398 N.Y.S.2d 194 (1977). The court construed that state's equivalent of § 14-171 and a corresponding state regulation created a duty on automobile dealers to adhere to those provisions' mandates in order to protect lien holders. Id., at 515-16.
Finding that the purpose of the Uniform Act "includ[ed] not only the orderly transfer of motor vehicles and protection of those who purchase them, but also the protection of those who loan money in reliance on the security which a lien upon a vehicle may provide," the New York court concluded that the defendant dealer's failure to adhere to the provisions of the statute and relevant regulation constituted a breach of a duty owed to the lien holder. Id. Thus, the lien holder was able to recover its damages from the dealer pursuant to a statutory negligence theory. Id.
In the instant case, the defendant Guilford argues that the penalties found in § 14-196 are the sole method for holding a party responsible for its violation of § 14-180, and that the plaintiff lien holder, therefore, has no cause of action against the defendant. The plaintiff/lien holder, on the other hand, argues that it is entitled to bring a claim in negligence against the dealer, and that § 14-180 establishes that a dealer who resells an automobile owes any lien holders a duty (1) to "promptly execute the assignment and warranty of title," (2) to ensure that those documents show "the names and addresses of . . . any lien holder holding a security interest created or reserved at the time of the resale and the date of such lien holder's security agreement," and (3) to "mail or deliver the certificate or statement to the commissioner with the transferee's application for a new certificate." See General Statutes § 14-180.
In Connecticut, "[w]here a statute is designed to protect persons against injury, one who has, as a result of its violation, suffered such an injury as the statute was intended to guard against has a good ground of recovery . . . Statutory negligence is actionable upon satisfaction of two conditions: (1) the plaintiff must be a member of the class protected by the statute; and (2) the injury must be of the type the statute was intended to prevent." (Citation omitted; internal quotation marks omitted.) Small v. South Norwalk Savings Bank, 205 Conn. 751, 760, 535 A.2d 1292 (1988).
The undersigned has found no Connecticut case law suggesting that § 14-196 is the sole remedy against a dealer who does not adhere to the provisions of § 14-180. While no case law was found that suggests § 14-180 creates a statutory duty owed by a resale dealer to a lien holder, it has been recognized (in Connecticut and New York) that § 14-171(b) — a similar provision of the Uniform Act — imposes a comparable duty, owed to lien holders, upon dealers that sell vehicles previously untitled in Connecticut.
These courts have found that § 14-171(b) is intended to protect lien holders from harm that could occur if a certificate of title is issued showing the automobile in question free and clear of encumbrances. Similarly, it is reasonable to interpret the provisions of § 14-180 to protect lien holders, and that the injury that provision contemplates is one in which either (a) a certificate of title is issued showing no encumbrances, or (b) no new certificate of title is issued at all because the dealer simply did not "mail or deliver the certificate or statement to the commissioner with the transferee's application for a new certificate."
Thus, under the rule in Small, § 14-180 creates a statutory duty for the defendant Guilford, which breached that duty by admittedly failing to record the plaintiff's lien. Therefore the defendant Guilford is liable to the plaintiff for compensatory damages proximately caused by the defendant Guilford's negligence, to wit, its admitted failure to register the subject motor vehicle with the plaintiff's lien on it.
DAMAGES
Based on the foregoing, the undersigned finds that the plaintiff is entitled to economic damages from the defendant Guilford in the amount of $12,888.77. The undersigned finds that the plaintiff has failed to prove any non-economic damages, and therefore makes no award in that regard. The undersigned further finds that the plaintiff has failed to sustain its burden of proof regarding an award of treble damages and, therefore, makes no award of treble damages.
Judgment may enter in accordance with this ruling.