Opinion
No. CV X06 08 4016022 S
January 13, 2009
MEMORANDUM OF DECISION ON THE DEFENDANTS' MOTION TO DISMISS (##159 and 159.5)
STATEMENT OF THE CASE
This action was instituted by the plaintiffs against various parties arising from a foreclosure sale of real and personal property in an action entitled TD Banknorth v. The Groth Family Limited Partnership, et al., Superior Court, judicial district of New Haven, Docket Number CV 05 4015817 S. The property subject to the foreclosure action included a resort and special events facility located in Wallingford and Meriden, Connecticut.
The named plaintiffs are: Frederick Ulbrich, Joseph Vrabely, Jr., Ulbrich Properties, LLC, and Mountainridge, LLC. The parties filing the motions to dismiss at issue are the defendants TD Banknorth, N.A., and Tranzon Auction Properties. They will be referred to as the defendants in this decision. The other defendants are: Kelly Groth, James D. Groth, James A. Groth, the estate of James A. Groth, Groth Family Limited Partnership, Festivals, Inc., JAG Associates, The Picnic Basket, LLC, Mountainside Corporation, the James A. Groth 1992 Irrevocable Life Insurance Trust and Groth 1990 Irrevocable Trust, Bruno Morasutti, Luby Olson, P.C., Reid and Riege, P.C., Robert Horton, Thomas Shernow and Whitten, Horton and Gibney, LLP.
The foreclosure action was instituted by the defendant TD Banknorth. The foreclosure court appointed the defendant Bruno Morasutti as the committee to conduct the sale. Thereafter, the court authorized the committee to retain the defendant Tranzon Auction Properties to market the property and conduct the sale. Banknorth noticed a secured party auction sale of its collateral to be held at the same time and place as the committee's auction sale.
The plaintiff Frederick Ulbrich was the successful bidder at the sale. According to the operative complaint, Ulbrich and the plaintiff Joseph Vrabely, Jr., "did in fact bid on the real and personal property at said auction whereby Ulbrich was the bidder on his behalf and on behalf of Vrabely." Revised Amended Complaint, ¶ 24. After the auction and the court's approval of the sale, the committee "consummated the sale of the property to Ulbrich and his designee [the plaintiff] Ulbrich Properties, LLC," with the committee issuing a deed for the real property and a bill of sale for the personal property. Id., ¶ 29. The real and personal properties were subsequently transferred to Ulbrich Properties, LLC. Id., ¶ 32. Ulbrich and Vrabely also formed the plaintiff Mountainridge, LLC, to operate the events facility. Id.
The gravamen of the plaintiffs' complaint is that they failed to receive all the personal property that they were entitled to receive as part of the public auction. Specifically as to the defendant Banknorth, count seven of the complaint alleges the following:
The defendant bank was negligent and careless not to ascertain the true status of the ownership of the personal property, and failed to properly investigate same. Further, the bank was negligent in allowing personalty to be sold, although not apparently a part of its security. The bank knew that the buyers would rely on the description of property being sold at public auction and plaintiffs did sorely, all to the special loss and damage of the plaintiffs herein.
Revised Amended Complaint, Seventh Count, ¶ 40.
As to the defendant Tranzon Auction Properties, the ninth count of the complaint alleges the following:
Defendant Tranzon Auction Properties acted as the auctioneer and prepared the bidder's prospectus which was utilized by bidders in regard to said auction. Defendant was negligent and careless in preparing the bidder's prospectus and conducting said auction by failing to clearly identify what personal property was included and what was not included in said auction and misleading the prospective bidders, including the plaintiffs who were damaged as a result of defendant's negligence and carelessness.
Revised Amended Complaint, Ninth Count, § 42.
Pending before the court are motions to dismiss filed by the defendants Banknorth and Tranzon Auction Properties. The defendants argue that the plaintiffs Vrabely, Ulbrich Properties and Mountainridge lack standing to assert the negligence claims under counts seven and nine of the complaint. As explained below, these motions to dismiss are granted as to Mountainridge and denied as to Vrabely and Ulbrich Properties.
DISCUSSION
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction . . ." (Citations omitted; internal quotation marks omitted.) Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005). The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." St. George v. Gordon, 264 Conn. 538, 544, 825 A.2d 90 (2003). "If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause . . . (Citation omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 485, 815 A.2d 1188 (2003). "[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." Fink v. Golenbock, 238 Conn. 183, 199 n. 13, 680 A.2d 1243 (1996).
The parties have not offered any evidence on the motions to dismiss, except for certain documents attached to the defendants' supporting memoranda. These documents do not contradict the basic factual allegations of the complaint. Therefore, the court must address the motions by looking at the allegations of the complaint, including any facts necessarily implied from the allegations, and construe these facts in a light most favorable to the plaintiffs. Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006). "[W]hen a motion to dismiss does not seek to introduce facts outside of the record it is equivalent to our former motion to erase and admits all well pleaded facts, the complaint being construed most favorably to the plaintiff . . . A motion to dismiss may raise issues of fact and would, therefore, require a hearing to determine the facts . . . Where, however, no genuine issue as to a material fact exists a hearing is not required because the motion merely presents a question of law as applied to the facts well pleaded." (Citations omitted; internal quotation marks omitted.) Sagamore Group, Inc., v. Commissioner of Transportation, 29 Conn.App. 292, 298, 614 A.2d 1255 (1992).
The defendants contend that the complaint essentially involves a collateral action contesting the fairness of the foreclosure proceedings, and as a consequence, Ulbrich is the only party who may claim that the foreclosure was improperly conducted. According to the defendants, because Ulbrich was the only plaintiff formally "identified" as the bidder at the auction, the other plaintiffs are without standing to contest the propriety of the foreclosure proceedings. More specifically, the defendants argue that Vrabely, Ulbrich LLC, and Mountainridge lack standing because they were not parties to the foreclosure action, could not have intervened in the foreclosure action, and their interests in this controversy are either remote or derivative of Ulbrich's claims. The court disagrees with how the defendants have attempted to frame the legal questions presented by the motions to dismiss.
Contrary to the defendants' characterization of the issue, the present controversy is not primarily premised on the "fairness" of the foreclosure proceedings. The specific jurisdictional issue implicated by the claims of the complaint is whether the plaintiffs have standing to assert negligence claims against the defendants emanating from the defendants' actions in the foreclosure proceedings. Consequently, the cases cited by and relied on by the defendants concerning a third-party's standing to intervene in foreclosure actions are inapposite.
On the other hand, the court agrees with the defendants' alternate contention that the issue of standing as raised by the motions to dismiss is controlled by the existence or nonexistence of a duty of care by the defendants. In the absence of any duty owed to the plaintiffs, the plaintiffs do not have standing to sue the defendants for negligence. See Connecticut Mutual Life Ins. Co. v. New York N.H.R. Co., 25 Conn. 265, 274-75 (1856); Cf. Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 480.
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . . Duty is a legal conclusion about relationships between individuals, made after the fact, and [is] imperative to a negligence cause of action . . . Thus, [t]here can be no actionable negligence . . . unless there exists a cognizable duty of care . . . [T]he test for the existence of a legal duty of care entails (1) a determination of whether an ordinary person in the defendant's position, knowing what the defendant knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result, and (2) a determination, on the basis of a public policy analysis, of whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case . . ." (Internal quotation marks omitted.) Murdock v. Croughwell, 268 Conn. 559, 566, 848 A.2d 363 (2004).
Based on paragraphs 24 and 32 of the operative complaint, "the plaintiffs Ulrich and Vrabely did in fact bid on the real and personal property at [the] auction whereby Ulbrich was the [successful] bidder on his behalf and on behalf of Vrabely," and after the auction, the property was transferred to Ulbrich, LLC. In paragraph 42 of the Ninth Count, it is alleged that Tranzon Auction was the auctioneer who prepared the bidder's prospectus negligently by failing to indicate adequately what personal property was included in the auction. In paragraph 40 of the Seventh Count, Banknortrh negligently failed to investigate or ascertain the true status of the personal property and the security interests that were the subject of the auction when the bank knew that bidders such as the plaintiffs would rely on the description. The plaintiffs allege that the descriptions were incorrect, that they relied on these descriptions, and that they were harmed as a result.
On the basis of these facts the court concludes that the defendants had a duty of care that extended to Vrabely and Ulbrich, LLC. It would have been reasonable for the defendants to anticipate that when the bidders determined the amounts of their bids they would rely on the defendants' statements describing the property being sold as part of the auction. It also would have been reasonable for the defendants to anticipate that the successful bidder would be harmed if the descriptions of the property subject to the auction improperly included property that was not part of the sale. Furthermore, it appears reasonable to extend the defendants' liability for such negligent conduct to Vrabely, on whose behalf the bid was made, and to Ulbrich, LLC, to whom the property was transferred as a result of the successful bid. See generally, Murdock v. Croughwell, supra, 268 Conn. 565. Although factually distinguishable, the Supreme Court's reasoning in Lombard v. Edward J. Peters, Jr., P.C., 252 Conn. 623, 749 A.2d 630 (2000), supports the court's conclusion that the defendants owed a duty of care to Vrabely and Ulbrich, LLC. In Lombard, the Supreme Court held that the committee appointed by the trial court to conduct a foreclosure sale owed a duty to the plaintiff not to misidentify the plaintiffs' property as having been included in the sale. Id., 632-34.
On the other hand, the court agrees with the defendants that their duty of care did not extend to Mountainridge. In paragraph 32 of the complaint, Mountainridge is described as an entity created or retained to operate the events facility. Under the allegations of this complaint, the court cannot conceive how the defendants would owe a duty to an entity that was merely retained by the owners of the property to operate facilities on the property. Stated differently, under the particular circumstances of this case, no public policy analysis would support the view that the defendants' responsibility for their conduct should extend to Mountainridge, who can only be described as an agent or employee of the property owner.
CONCLUSION
Therefore, the defendant TD Banknorth's motion to dismiss the Seventh Count of the Revised Amended Complaint and the defendant Tranzon Auction Properties' motion to dismiss the Ninth Count of the Revised Amended Complaint are denied as to the plaintiff Joseph Vrabely, Jr. and the plaintiff Ulbrich Properties LLC. These motions to dismiss are granted as to the plaintiff Mountainridge, LLC.
So ordered this 13th day of January 2009.