Opinion
No. FST CV 09 6002662 S
June 16, 2010
MEMORANDUM OF DECISION RE MOTION TO STRIKE (112.00)
I. FACTS
The plaintiff, Patriot National Bank, filed a summons and complaint against the defendants 450 North St. Re, LLC (450 North), Tal Etstein, DHD Windows and Doors, LLC, West Haven Lumber Company (West Haven) and Quality Tile Corporation on December 4, 2009. In its complaint, the plaintiff alleged the following facts.
On October 25, 2006, the plaintiff and 450 North executed a construction loan promissory note, in which 450 North promised to pay the plaintiff $4,410,000.00 with interest. 450 North mortgaged property at 450 North Street in Greenwich, Connecticut to the plaintiff to secure the note, and the mortgage deed was recorded in the land records. To further secure the note, 450 North executed a security agreement, which granted Patriot a security interest in "certain property owned by 450 North." The financing statement, which showed the plaintiff's security interest, was filed with the Connecticut Secretary of State on October 31, 2006 and entered into the land records.
On March 27, 2008, the plaintiff and 450 North entered into a second construction loan promissory note, in which 450 North promised to pay the plaintiff $786,355.00 with interest. 450 North mortgaged 450 North Street to the plaintiff to secure the note, and this second mortgage deed was recorded in the land records. To further secure the note, 450 North executed a security agreement, which granted Patriot a security interest in "certain property owned by 450 North." The financing statement, which showed the plaintiff's security interest, was filed with the Connecticut Secretary of State on April 2, 2008 and entered into the land records.
On February 25, 2009, West Haven filed a lien in the amount of $108,956.43 on the land records for materials provided to 450 North. When 450 North defaulted on its obligations under the construction loan promissory notes, the plaintiff commenced foreclosure proceedings and alleged that West Haven's claim is subject, subordinate and inferior to the plaintiff's mortgages.
On January 5, 2010, the defendant West Haven filed an answer, special defenses, counterclaim and cross claim. West Haven's first special defense is that the plaintiff's lien against the property is invalid, because the plaintiff did not fully disburse the funds due under its note. West Haven's second special defense is that portions of the debt claimed by plaintiffs are subsequent in right to West Haven's lien. West Haven states that the materials furnished by West Haven were provided subsequent to the initial filing of the plaintiff's mortgages but prior to the plaintiff's disbursement to 450 North of all of the funds.
In its counterclaim, West Haven alleges a claim of unjust enrichment. West Haven alleges that it provided materials to 450 North for use at 450 Main Street, and despite demands for payment, 450 North has not paid all amounts due. Additionally, neither 450 North nor the plaintiff have paid for the reasonable value of the materials. West Haven asserts that both 450 North and the plaintiff have been unjustly enriched by West Haven's provision of materials. West Haven states that it has suffered damages as a result of 450 North's failure to pay.
On January 20, 2010, the plaintiff moved to strike West Haven's two special defenses and counterclaim for failure to state a claim or defense upon which relief may be granted. The plaintiff filed a memorandum in support of the motion. That motion, which is opposed by West Haven, was argued on March 29, 2010.
II. DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[T]he moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994). "If facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 498. The court should "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117, 889 A.2d 810 (2006).
"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 . . . A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). "In . . . ruling . . . on [a] motion to strike [a special defense], the trial court [is obligated] to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency." Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992).
The plaintiff moves to strike West Haven's first special defense on the ground that the plaintiff was not required to disburse the entire amount of the loan. West Haven counters that the mortgage lien is invalid because the loan was not disbursed according to its terms and states that the plaintiff materially breached its contract because a lender that does not fully advance all loan proceeds has not substantially performed.
In Connecticut Bank Trust Co. v. Carriage Lane Assoc., 219 Conn. 772, 595 A.2d 334 (1991), the Connecticut Supreme Court held that absent bad faith or an express agreement, a senior mortgagee does not owe a duty to a junior mortgagee to advance proceeds of a loan in accordance with the specifications stated in the senior mortgage. The Court stated that "[i]n the absence of . . . collusion, or an express agreement, [a senior mortgagee] is under no obligation to see that moneys it advances are employed by the borrower in the manner contemplated by the subordinated purchase money mortgagee . . ." Id., 782. Quoting from a State of Washington case, the Connecticut Supreme Court continued, "Outside the contract, the major duty which a construction lender owes to any other party is the duty of good faith; though a loan may be inefficiently managed and with adverse consequences, neither inferior lienors nor absolute guarantors have any recourse against the lender unless it is alleged and proved that the lender acted in bad faith." (Internal quotation marks omitted; citations omitted.) Id.
In the present case, West Haven did not allege in its first special defense that the plaintiff acted in bad faith or had a duty to West Haven, pursuant to an express agreement, to disburse the loan to 450 North. West Haven, as an inferior lienor, does not have recourse against the plaintiff for its alleged failure to disburse the entirety of the loan to 450 North. Therefore, West Haven's first special defense fails to state a defense upon which relief may be granted and must be stricken.
West Haven's second special defense asserts that portions of the plaintiff's claim against 450 North are subsequent in right to West Haven's lien. The plaintiff counters that as a matter of law, the plaintiff's loan has priority over West Haven's lien.
Pursuant to General Statutes § 49-33 in relevant part, a mechanic's lien "takes precedence over any other encumbrance originating after the commencement of the services, or the furnishing of any such materials . . ." (Emphasis added.) Further, a mortgage deed takes priority from the record date rather than disbursement date. See Independence Mortgage One Corp. v. Katsaros, 43 Conn.App. 71, 73, 681 A.2d 1005 (1996); General Statutes § 49-4b.
The plaintiff alleges in its complaint that it recorded the mortgages in the land records; however, the allegations do not specifically provide the date of the recordation. According to West Haven's counterclaim, West Haven furnished materials to 450 North from October 10, 2008 to December 8, 2009. Counterclaim, ¶ 8. If the plaintiff's record dates were alleged as dates prior to October 10, 2008, West Haven's special defense would fail to state a claim upon which relief could be granted. In this case, although not specifically pleaded, the second mortgage provided by 450 North to plaintiff is attached as Exhibit H to the Complaint, and clearly evidences that it was recorded on March 28, 2008 in Book 5589 of the Greenwich land records. Exhibit H (last page); Practice Book § 10-29. Furthermore, West haven's second special defense clearly states that West Haven's materials were furnished "subsequent to" the plaintiff's mortgages. Dkt Entry 109.00. Based on the foregoing, the second special defense is stricken.
The plaintiff also moves to strike West Haven's counterclaim, which alleges unjust enrichment. The plaintiff argues that it had no duty to pay for West Haven's materials, so West Haven cannot satisfy one of the necessary elements of their claim for unjust enrichment. West Haven counters that it has pled the required elements of a cause of action for unjust enrichment.
"It has long been established under Connecticut law that [p]laintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiff's detriment." (Internal quotation marks omitted.) Data-Flow Technologies, LLC v. Harte Nissan, Inc., 111 Conn.App. 118, 126, 958 A.2d 195 (2008). There is only one case indicating that the plaintiff must have a duty to pay for the benefits in order to prove that the plaintiff unjustly did not pay for a benefit. See Gianetti v. Greater Bridgeport Individual Practice Association, Superior Court, complex litigation docket at Waterbury, Docket No. X02 CV 02 4001685 (July 21, 2005, Shuman, J.). In that case, the plaintiff doctor sued a practice association and a health services association for failure to reimburse the plaintiff doctor for services provided. Id. The plaintiff alleged a claim of unjust enrichment. Id. The practice association successfully moved for summary judgment on the ground that it had no responsibility for the shortfall in payments, because the plaintiff billed the health services association exclusively for services rendered. Id. Additionally, the practice association had no responsibility for establishing the rates of repayment to the physician. Id. In that case, the Gianetti court stated that "[a]n essential element of unjust enrichment is that the defendant unjustly failed to pay plaintiff for the benefits . . . Because [the defendant] had no obligation to pay benefits to the plaintiff, any failure of [the defendant] to pay plaintiff was not unjust . . ." (Internal quotation marks omitted; citations omitted.) Gianetti v. Greater Bridgeport Individual Practice Association, supra, n. 14. Superior Court, complex litigation docket at Waterbury, Docket No. X02 CV 02 4001685.
In the present case, West Haven alleges that it furnished materials to the real property at 450 Main Street at 450 North's request. Subsequently, 450 North failed to make payments on the materials delivered and services performed, and West Haven suffered damages as a result. West Haven alleges that the plaintiff unjustly did not pay for the benefits it received. West Haven and the plaintiff never had an agreement concerning the materials, but the plaintiff stands to benefit because 450 North made improvements to a property in which the plaintiff retained a security interest. There is no appellate authority indicating that there must be a duty to pay for the benefit in order to fulfill the element of unjust failure to pay for a benefit. Indeed, Gianetti, a summary judgment case, cites to Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 283 (1994), which states that determining what is just is a question of fact. West Haven alleged all of the elements of a claim for unjust enrichment in their counterclaim, and the allegations in the pleadings are insufficient to conclude that the plaintiff was not enriched unjustly. Accordingly, West Haven pleaded all of the elements of a claim for unjust enrichment in its counterclaim, and the motion to strike the counterclaim should be denied.
III. CONCLUSION CT Page 12666
Because West Haven, as an inferior lienor, does not have recourse against the plaintiff for its alleged failure to disburse the entirety of the loan to 450 North, the court grants the motion to strike the first special defense. Because the mortgage recordation occurred before West Haven's lien arose, the second count is also stricken. Finally, there is no precedential authority indicating that there must be a duty to pay for the benefit in order to fulfill the element of unjust failure to pay for a benefit. West Haven pleaded all of the elements of a claim for unjust enrichment in its counterclaim, and the court denies the motion to strike the counterclaim.