Patricia Thompson v. David Gannalo (2010)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT

I. Background

The plaintiff, Patricia Thompson, commenced this action against the defendant, David Gannalo, on September 9, 2008, and subsequently amended her complaint on April 21, 2009.   The amended complaint, which is brought pursuant to General Statutes § 47-31,¹ asserts that the plaintiff is the sole owner of a residential property in Milford, Connecticut known as 97 Trumbull Avenue (the property), and that the defendant placed two invalid judgment liens on the property and refuses to release them.   The amended complaint therefore requests that this court quiet title to the property by discharging these liens.

On May 20, 2009, the plaintiff filed a motion for summary judgment, which was accompanied by (1) a memorandum of law;  (2) certified copies of relevant deeds of conveyance; ²  (3) certified copies of the original and amended certificates of judgment lien in question,³ both of which name the plaintiff's husband, Maurice Thompson, Jr. (Maurice), as judgment debtor;  and (4) written correspondence exchanged between Maurice and the defendant, as well as Maurice's affidavit authenticating these correspondence.

On July 16, 2009, the defendant filed an answer, special defenses and a counterclaim in response to the plaintiff's amended answer.   That same day, he filed an objection to the plaintiff's motion for summary judgment.   The objection was accompanied by a memorandum of law and the affidavits of the defendant and Joseph Concordia, who attests to a title search he performed on the property.   Each party subsequently provided the court with an additional memorandum of law, and the matter was heard at short calendar on March 8, 2010.

The following additional facts are not in dispute.   The plaintiff and Maurice, her husband, acquired title to the property as joint owners by virtue of a warranty deed dated April 9, 2002.   They recorded this deed in the Milford land records on April 15, 2002.   On April 5, 2004, the plaintiff recorded a quitclaim deed, dated March 18, 2004, by which Maurice transferred his interest in the property to the plaintiff, leaving her as the sole owner.

Subsequently, on July 9, 2004, the defendant placed a judgment lien on the property.   The lien was intended to secure a judgment of $100,000 plus costs and statutory interest that was entered against Maurice in Arizona Superior Court on March 8, 2004.⁴

Again, this action was commenced on September 9, 2008, and the amended complaint asserts that the judgment liens “were recorded on property that was not owned and is not owned by the judgment debtor,” Maurice.   It further asserts that, pursuant to § 47-31, “the [c]ourt should [therefore] quiet title to the [p]roperty by discharging [the][d]efendant's [j]udgment [l]iens.”   The plaintiff now moves for summary judgment, arguing that the aforementioned undisputed facts demonstrate that the judgment liens are invalid, and that she is entitled to her requested relief as a matter of law.⁵

In response, the defendant argues that genuine issues of material fact remain with regard to the applicability of each of his three special defenses.⁶  These special defenses assert that the plaintiff is not entitled to the relief she seeks in this quiet title action because (1) she failed to cite in all interested parties, as he claims is required by § 47-31;  (2) Maurice retained an equitable interest in the property at the time the judgment liens were recorded;  and (3) the conveyance of Maurice's interest in the property to the plaintiff by quitclaim deed was done for the sole purpose of defrauding the defendant.

For the following reasons, the court finds that genuine issues of material fact remain, and therefore denies the plaintiff's motion for summary judgment.

II. Standard

“Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).  “[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Citation omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).

Where a defendant has asserted several special defenses, “[o]nly one ․ needs to be valid in order to overcome [a] motion for summary judgment.  [S]ince a single valid defense may defeat recovery, [a movant's] motion for summary judgment should be denied when any defense presents significant fact issues that should be tried.”  (Internal quotation marks omitted.)  Union Trust Co. v. Jackson, 42 Conn.App. 413, 417, 679 A.2d 421 (1996).

In the present case, the court finds that genuine issues of material fact remain as to the validity of the plaintiff's fraudulent conveyance special defense, and therefore as to whether title to the property should be quieted in the plaintiff's favor.   At the outset, it must be noted that our Supreme Court previously explained that “[w]hether a judgment lien is valid generally involves a mixed question of fact and law.”  PNC Bank, N.A. v. Kelepecz, 289 Conn. 692, 697, 960 A.2d 563 (2008).   It has also instructed that “[t]he determination of whether a fraudulent transfer took place is a question of fact ․” (Internal quotation marks omitted.)  Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 395, 957 A.2d 836 (2008).

A party asserting that a conveyance or transfer was fraudulent must prove “either:  (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations or (2) that the conveyance was made with a fraudulent intent in which the grantee participated.”  (Internal quotation marks omitted.)  Id., 394.  “The elements of fraudulent conveyance, including ․ fraudulent intent, must be proven by clear, precise and unequivocal evidence.”  (Internal quotation marks omitted.)  Id., 395.

In the present case, the court finds that the evidence before it raises issues of fact regarding whether the plaintiff and her husband, Maurice, intended to defraud the defendant when Maurice transferred his interest in the property to the plaintiff, and as to whether the conveyance was made without substantial consideration and prevented Maurice from satisfying his obligation to the defendant.   Certainly, the time line established by the evidence, which demonstrates that Maurice transferred his interest in the property to the plaintiff by quitclaim deed a mere ten days after an adverse judgment was entered against him, raises issues of fact pertaining to his and the plaintiff's intent.   Furthermore, the quitclaim deed by which Maurice conveyed his interest states that the transfer was made “in consideration of the sum of ONE DOLLAR ($1.00) AND OTHER VALUABLE CONSIDERATION ․” Whether this constituted “substantial consideration” and, if not, whether the conveyance prevented Maurice from satisfying his obligation to the defendant, are both questions of fact that must be resolved before it may be determined whether the plaintiff is entitled to the relief she now seeks.

The plaintiff nevertheless contends that, even assuming the conveyance was fraudulent, she is still entitled to judgment as a matter of law.   This is so, she argues, because any attempt to assert a cause of action for fraudulent conveyance is time barred by General Statutes § 52-552j,⁷ which contains a one year statute of limitation and a four year statute of repose for claims of fraudulent conveyance.

In the first place, the court notes that § 52-552j pertains to statutory claims of fraudulent conveyance made pursuant to the Uniform Fraudulent Transfer Act (UFTA), General Statutes § 52-552 et seq.   However, the defendant's fraudulent conveyance special defense does not refer to the provisions of the UFTA. Thus, the court would ordinarily assume that the defendant's special defense is made pursuant to the common law, which also recognized a claim for those harmed by a fraudulent conveyance.⁸  See, e.g., id., 394-95 (recognizing that the UFTA “is largely an adoption and clarification of the standards of the common law of [fraudulent conveyances]” but acknowledging the UFTA does not displace common law (internal quotation marks omitted));  see also Lee v. BSB Greenwich Mortgage Ltd. Partnership, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. X08 CV 04 0200344 (August 31, 2007, Jennings, Jr., J.) (“When Connecticut adopted the [UFTA], it did not abolish the common law cause of action for fraudulent transfers.”);  General Statutes § 52-552k (principles of law and equity-including those relating to fraud-supplement the UFTA).   This being so, “the three year limitation period contained in ․ § 52-577 [which] applies to common-law fraudulent conveyance actions”;  Valentine v. Labow, 95 Conn.App. 436, 445, 897 A.2d 624, cert. denied, 280 Conn. 933, 909 A.2d 963 (2006);  would be applicable.

Regardless of whether the court construes the defendant's fraudulent conveyance argument as invoking the UFTA, the common law or both, it is clear that neither § 52-552j nor § 52-577 prevents the defendant from asserting, as a matter of defense, that the conveyance was fraudulent.   This is because “[t]he ultimate purpose of a limitation law is to bar actions rather than to suppress or deny matters of defense.   The object of a statute of limitation in keeping stale litigation out of the courts would be distorted if the statute were applied to bar an otherwise legitimate defense to a timely lawsuit, for limitation statutes are aimed at lawsuits and not at the consideration of particular issues in lawsuits.   Thus, limitation statutes are not applicable to defenses, but apply only when affirmative relief is sought.   In other words, as long as the courts will hear the plaintiff's case, time will not bar a defense if it grew out of the same transaction as the plaintiff's claim or if the cause of action and the asserted defense are closely and logically related in a sort of legal affinity, or if the defense, if given effect, would negate the plaintiff's right to recover.”   51 Am.Jur.2d 528-29, Limitation of Actions § 122 (2000).   This rule applies in situations where fraudulent conveyance is raised as a defense:  “[I]f the question as to the fraudulent character of the deed arises in any way other than in ․ an action [for relief on the ground of fraud], there is nothing in the statute [of limitations] that forbids its being assailed for fraud.”   37 Am.Jur.2d 658, Fraudulent Conveyances & Transfers § 178 (2001).

This rule has been recognized by Connecticut's appellate courts.   In Valentine v. LaBow, supra, 95 Conn.App. 438-39, the defendant in a partition action filed a counterclaim on December 11, 1981, alleging that the plaintiff, the trustee of a trust into which the plaintiff's husband had transferred his interest in certain real property during an ongoing dissolution proceeding, acted in concert with her husband to defraud her by virtue of the conveyance.   The plaintiff moved for summary judgment on the defendant's fraudulent conveyance counterclaim, arguing that the three-year limitation period found in § 52-577 barred the plaintiff's counterclaim, since the transfer occurred on November 5, 1975.  Id., 440.   The trial court agreed, and granted the plaintiff's motion for summary judgment.  Id., 441.   On appeal, the defendant argued that “the statute of limitations contained in § 52-577 is not applicable to claims of fraudulent conveyance, when such claims are raised as defenses in an equitable proceeding.”  Id., 445.

In support of this claim, the defendant cited Virginia Corp. v. Galanis, 223 Conn. 436, 613 A.2d 274 (1992).  Id., 445-46.  “In Virginia Corp., Armstrong Capital, S.A., the defendant in a foreclosure action, filed a special defense of fraudulent conveyance in order to obtain a priority position as an encumbrancer on a parcel of property ․ The plaintiff, Virginia Corporation, and another defendant, Consolidated Capital Corporation, argued that Armstrong was barred from bringing an action to set aside a fraudulent conveyance by the three-year statute of limitations contained in § 52-577 ․ The court, however, disagreed and offered the following distinction:  ‘Since the present case does not involve an action to set aside a fraudulent conveyance, but rather an equitable defense asserted by Armstrong [Capital, S.A.] as a defendant in a foreclosure action ․ § 52-577 is inapplicable.’  “ (Citations omitted;  emphasis in original.)  Id., 446.

The Appellate Court found Virginia Corp. to be distinguishable from the case before it because, whereas the defendant in Virginia Corp. asserted fraudulent conveyance as an equitable defense in an equitable proceeding in which it was a defendant, in the case before it “the defendant's fraudulent conveyance claim [was] clearly an action to set aside a fraudulent conveyance in order to gain full ownership.”  (Emphasis in original.)  Id. The distinction between the assertion of fraudulent conveyance as a cause of action and as an equitable defense was “outcome determinative.”  Id. Thus, in Valentine, the Appellate Court held that, because the defendant asserted fraudulent conveyance as a cause of action and sought, as affirmative relief, to have the transfer set aside, the three-year limitation period found in § 52-577 applied and barred the counterclaim.  Id.

In the present case, the defendant asserts fraudulent conveyance in this equitable quiet title action ⁹ as an equitable defense.¹⁰  The limitation periods found in §§ 52-577 and 52-552j therefore have no applicability, and the assertion of the defense, when considered in conjunction with the evidence before the court, presents genuine issues of material fact that remain unresolved.¹¹  The plaintiff's motion for summary judgment is therefore denied.

JOHN W. MORAN, JUDGE TRIAL REFEREE

FOOTNOTES

FN1. General Statutes § 47-31 provides in relevant part:  “(a) An action may be brought by any person claiming title to, or any interest in, real ․ property ․ against any person who may claim ․ any lien or encumbrance on it, adverse to the plaintiff, or against any person in whom the land records disclose any interest, lien, claim or title conflicting with the plaintiff's claim, title or interest, for the purpose of determining such adverse estate, interest or claim, and to clear up all doubts and disputes and to quiet and settle the title to the property.   Such action may be brought whether or not the plaintiff is entitled to the immediate or exclusive possession of the property ․“(f) The court shall hear the several claims and determine the rights of the parties, whether derived from deeds, wills or other instruments or sources of title, and may determine the construction of the same, and render judgment determining the questions and disputes and quieting and settling the title to the property.”.  FN1. General Statutes § 47-31 provides in relevant part:  “(a) An action may be brought by any person claiming title to, or any interest in, real ․ property ․ against any person who may claim ․ any lien or encumbrance on it, adverse to the plaintiff, or against any person in whom the land records disclose any interest, lien, claim or title conflicting with the plaintiff's claim, title or interest, for the purpose of determining such adverse estate, interest or claim, and to clear up all doubts and disputes and to quiet and settle the title to the property.   Such action may be brought whether or not the plaintiff is entitled to the immediate or exclusive possession of the property ․“(f) The court shall hear the several claims and determine the rights of the parties, whether derived from deeds, wills or other instruments or sources of title, and may determine the construction of the same, and render judgment determining the questions and disputes and quieting and settling the title to the property.”

FN2. These include:  (1) a certified copy of a warranty deed, dated April 9, 2002 and recorded April 15, 2002 in the Milford land records at volume 2572, page 447, transferring the property from Mario and Eleanor Pace to Maurice and the plaintiff, and (2) a certified copy of a quitclaim deed, dated March 18, 2004 and recorded April 5, 2004 in the Milford land records at volume 2864, page 20, by which Maurice transferred his interest in the property to the plaintiff..  FN2. These include:  (1) a certified copy of a warranty deed, dated April 9, 2002 and recorded April 15, 2002 in the Milford land records at volume 2572, page 447, transferring the property from Mario and Eleanor Pace to Maurice and the plaintiff, and (2) a certified copy of a quitclaim deed, dated March 18, 2004 and recorded April 5, 2004 in the Milford land records at volume 2864, page 20, by which Maurice transferred his interest in the property to the plaintiff.

FN3. The court notes that the plaintiff's amended complaint alleges that the defendant placed two judgment liens on the property-one for a $100,000 judgment plus costs and statutory interest, and another for a $25,000 judgment Aus costs and statutory interest-and that both judgment liens were subsequently amended.   However, the plaintiff has only provided the court with certified copies of the original and amended certificates of judgment lien that secure the $100,000 judgment..  FN3. The court notes that the plaintiff's amended complaint alleges that the defendant placed two judgment liens on the property-one for a $100,000 judgment plus costs and statutory interest, and another for a $25,000 judgment Aus costs and statutory interest-and that both judgment liens were subsequently amended.   However, the plaintiff has only provided the court with certified copies of the original and amended certificates of judgment lien that secure the $100,000 judgment.

FN4. This lien was amended on September 1, 2004 so as to include the correct docket number from the Arizona proceeding..  FN4. This lien was amended on September 1, 2004 so as to include the correct docket number from the Arizona proceeding.

FN5. In his memorandum of law in opposition, the defendant asserts that it is unclear whether the plaintiff's motion pertains only to her amended complaint, or also seeks judgment as to his counterclaim, which alleges that Maurice's conveyance of the property to the plaintiff was fraudulent and asks the court to declare it null and void as it pertains to him.   It is clear to the court, however, that the plaintiff only seeks judgment as to her amended complaint.   This must be so because the plaintiff filed her motion for summary judgment nearly a month before the defendant filed his counterclaim.   Furthermore, neither the plaintiff's motion for summary judgment nor the two memoranda of law filed in support thereof so much as mention the defendant's counterclaim.   The court therefore interprets the pending motion for summary judgment as relevant only to the § 47-31 quiet title claim contained in the plaintiff's amended complaint..  FN5. In his memorandum of law in opposition, the defendant asserts that it is unclear whether the plaintiff's motion pertains only to her amended complaint, or also seeks judgment as to his counterclaim, which alleges that Maurice's conveyance of the property to the plaintiff was fraudulent and asks the court to declare it null and void as it pertains to him.   It is clear to the court, however, that the plaintiff only seeks judgment as to her amended complaint.   This must be so because the plaintiff filed her motion for summary judgment nearly a month before the defendant filed his counterclaim.   Furthermore, neither the plaintiff's motion for summary judgment nor the two memoranda of law filed in support thereof so much as mention the defendant's counterclaim.   The court therefore interprets the pending motion for summary judgment as relevant only to the § 47-31 quiet title claim contained in the plaintiff's amended complaint.

FN6. The defendant also argues that the plaintiff's motion for summary judgment “appears to be premature” because it was filed before he filed an answer and special defenses in response to the amended complaint.   However, Practice Book § 17-44 expressly states that “any party may move for a summary judgment at any time” before the case is assigned for trial.   Thus, the plaintiff's motion for summary judgment was not premature..  FN6. The defendant also argues that the plaintiff's motion for summary judgment “appears to be premature” because it was filed before he filed an answer and special defenses in response to the amended complaint.   However, Practice Book § 17-44 expressly states that “any party may move for a summary judgment at any time” before the case is assigned for trial.   Thus, the plaintiff's motion for summary judgment was not premature.

FN7. General Statutes § 52-552j provides:  “A cause of action with respect to a fraudulent transfer or obligation under [§§ ]52-552a to 52-552l, inclusive, is extinguished unless action is brought:  (1) Under subdivision (1) of subsection (a) of [§ ]52-552e, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;  (2) under subdivision (2) of subsection (a) of [§ ]52-552e or subsection (a) of [§ ]52-552f, within four years after the transfer was made or the obligation was incurred;  or (3) under subsection (b) of [§ ]52-552f, within one year after the transfer was made or the obligation was incurred..  FN7. General Statutes § 52-552j provides:  “A cause of action with respect to a fraudulent transfer or obligation under [§§ ]52-552a to 52-552l, inclusive, is extinguished unless action is brought:  (1) Under subdivision (1) of subsection (a) of [§ ]52-552e, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;  (2) under subdivision (2) of subsection (a) of [§ ]52-552e or subsection (a) of [§ ]52-552f, within four years after the transfer was made or the obligation was incurred;  or (3) under subsection (b) of [§ ]52-552f, within one year after the transfer was made or the obligation was incurred.

FN8. The elements of a statutory fraudulent conveyance claim made pursuant to the UFTA are the same as those that must be proven when asserting a common law claim for fraudulent conveyance.  Certain Underwriters at Lloyd's, London v. Cooperman, supra, 289 Conn. 395..  FN8. The elements of a statutory fraudulent conveyance claim made pursuant to the UFTA are the same as those that must be proven when asserting a common law claim for fraudulent conveyance.  Certain Underwriters at Lloyd's, London v. Cooperman, supra, 289 Conn. 395.

FN9. Like foreclosure and partition actions, quiet title actions brought pursuant to § 47-31 are equitable proceedings.   See Moore v. Savin Rock Condo, Superior Court, judicial district of New Haven, Docket Nos. CV 04 4002592 and CV 06 4021317 (December 7, 2006, Cosgrove, J.) (42 Conn. L. Rptr. 502, 505)..  FN9. Like foreclosure and partition actions, quiet title actions brought pursuant to § 47-31 are equitable proceedings.   See Moore v. Savin Rock Condo, Superior Court, judicial district of New Haven, Docket Nos. CV 04 4002592 and CV 06 4021317 (December 7, 2006, Cosgrove, J.) (42 Conn. L. Rptr. 502, 505).

FN10. See footnote five of this memorandum of decision, explaining that the court interprets the plaintiff's motion for summary judgment as seeking judgment only as to her amended complaint, and not the defendant's fraudulent conveyance counterclaim..  FN10. See footnote five of this memorandum of decision, explaining that the court interprets the plaintiff's motion for summary judgment as seeking judgment only as to her amended complaint, and not the defendant's fraudulent conveyance counterclaim.

FN11. Because a motion for summary judgment must be denied when any one of a defendant's several special defenses creates a genuine issue of material fact;  Union Trust Co. v. Jackson, supra, 42 Conn.App. 417;  the court need not address the potential viability of the defendant's other two special defenses at this time..  FN11. Because a motion for summary judgment must be denied when any one of a defendant's several special defenses creates a genuine issue of material fact;  Union Trust Co. v. Jackson, supra, 42 Conn.App. 417;  the court need not address the potential viability of the defendant's other two special defenses at this time.

Moran, John W., J.T.R.