LLC v. LLC (2010)

MEMORANDUM OF DECISION

This is an action in three counts:  count one-foreclosure of a mortgage;  count two-collection of a note;  and count three-guaranty.

The plaintiffs, Summit Real Estate Services, LLC, et al (Summit), have moved the Court to strike the third and fourth special defenses of the defendants, Eaton Enterprises, LLC, et al (Eaton), as well as the defendants' second, third and fourth counterclaims.   In the alternative, the plaintiffs have asked the Court to limit the application of the third and fourth special defenses to the second count of the plaintiffs' complaint.

On a prior occasion the Court (Blawie, J.) granted the plaintiffs' motion to strike the defendants' second, third and fourth counterclaims and further ordered that the third and fourth special defenses be limited in their application to the second count of the complaint.

The defendants have moved the court to reargue Judge Blawie's ruling, but only as it applies to the limitation of the third and fourth special defenses to the second count.   They do not seek to reargue the ruling striking the counterclaims.   The motion to reargue was granted and the matter was heard by the undersigned.   The court reserved decision.

“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 Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).

“A motion to strike challenges the legal sufficiency of a pleading ․ and consequently, requires no factual findings by a trial court.”  Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277-94 (2007).  “[A] plaintiff can [move to strike] a special defense ․” Nowak v. Nowak, 175 Conn. 112, 116 (1978).

Having considered the arguments of counsel and the applicable statutes and case law, the court makes the following findings.

The basis for the defendants' special defenses is the claim by the defendants that the parties were engaged in a number of business relationships, not just those referred to in the plaintiffs' complaint.   The defendants further argue that the plaintiffs are obligated to the defendants for the payment of certain profits or loss of profits arising from those other business transactions which are proper matters for the court to take into consideration in this case as they constitute either set offs or recoupments which would reduce any judgment the plaintiffs seek in this case.

In support of their claim, the defendants cite the preamble to the plaintiffs' complaint captioned “Facts Pertaining To All Counts,” wherein the plaintiffs state that the parties “commenced a business relationship concerning, inter alia, development projects ․” and, “In furtherance of the relationship, Plaintiffs, at Defendants', request, entered into certain agreements to loan funds to Defendants to allow Defendants to pursue business opportunities.”

The plaintiffs object to the efforts by the defendants to interject into this case their claims that they suffered damages or losses in business agreements other than the two which are the subject of this suit.   They also object for the reason that such claims are merely that -claims as opposed to liquidated debts owed to the defendants.

“Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ․ 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 ․” Chase Manhattan Mortg.   Corp. v. Machado, 83 Conn.App. 183, 188 (2004).

The defendants, in their third and fourth special defenses have not plead facts to establish that the plaintiffs have no cause of action.   They may be a reason to reduce or limit any monetary award the plaintiffs are seeking, but they do not support the defendants' claim that they render the plaintiffs' claims unenforceable.   For that reason, the motion to strike them as they relate to the first and third counts of the plaintiffs' complaint is granted.

As to the second count, which is a collection action on a note, the defendants' special defenses are expressly designed to obtain a set off or recoupment for damages or losses they allegedly sustained from business transactions which the plaintiffs concede to be part of the “business relationship” with the defendants as alluded to in the opening paragraphs of the plaintiffs' complaint.   The fact that the claims of the defendants are only claims does not prohibit the defendants from seeking to have them taken into consideration by the finder of the facts as an offset of any judgment the plaintiffs may be awarded in this case.  “A debt is defined as an ‘unconditional and legally enforceable obligation for the payment of money.”   Petti v. Balance Rock Associates, 12 Conn.App. 353, 362 (1987).  (Emphasis added.)

The law of set off is governed by C.G.S. § 52-139, which states in relevant part:  “(a) in any action for the recovery of a debt, if there are mutual debts between the plaintiff or plaintiffs, or any of them, and the defendant or defendants, or any of them, one debt may be set off against the other.”

“A condition precedent to the application of § 52-139 is that the defendant's claim arise from a debt due by the plaintiff.”  Id.

“It is the defendant's burden to demonstrate its right of setoff by affirmatively and adequately alleging such claim in the pleadings.”   Practice Book § 168;  Peters Production, Inc. v. Dawson, 182 Conn. 586, 528 (1980).

For the foregoing reasons, the court hereby grants the plaintiffs' motion to strike the defendants' counterclaims.   The court also grants the plaintiffs' motion to strike the defendants' third and fourth special defenses as they relate to counts one and three of the plaintiffs' complaint.   The court denies the motion to strike the third and fourth special defenses as to the second count of the plaintiffs' complaint.

BY THE COURT,

JOSEPH W. DOHERTY, JUDGE

Doherty, Joseph W., J.