Carmine Fusaro et al. v. Hartford Fire Insurance Co. (2010)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (107.00)

I. Background

The plaintiffs, Carmine and Umberto Fusaro, bring this case against the Hartford Fire Insurance Company (Hartford) seeking damages from a surety bond issued by Hartford naming Malik's Financial, LLC (Malik's) as the bonded principal.   The complaint alleges numerous wrongful acts by Malik's in connection with refinancing transactions entered into by the Fusaros who used Malik's as a mortgage broker.   The complaint makes a number of general allegations against Malik's and one Asif Malik, the principal of Malik's, to the effect that the Fusaros were unsophisticated persons, and were gulled into many refinancing transactions for their Stamford properties which were not needed, and which they could not afford.   Specifically, the complaint alleges nine refinancing transactions for the Fusaro properties in which Malik's was the mortgage broker beginning in November 2001 and ending in February 2006.   Complaint ¶¶ 16-25.   In one of the later transactions it is alleged that Malik's provided inaccurate information to the lenders and in two transactions it is alleged that Malik's received improper fees.   It is alleged that Asif Malik and Malik's violated the provisions of General Statutes §§ 36a-482 through 36a-498a inclusive.  Id., ¶ 31.

The complaint further alleges, and Hartford agrees, that in 2004 Malik's executed a First Mortgage Bond as principal and Hartford as surety in the amount of $40,000.   The parties also agree that in May or early June 2009 the Fusaros filed a written claim on the bond which was denied by Hartford in August 2009.

Copies of the bond are attached to the complaint and to the affidavit of David Thomas, Assistant Claim Manager in Hartford's Bond Claim Department, filed in support of the summary judgment motion.   The bond was for the protection of borrowers and prospective borrowers to insure that Malik's performed all written agreements and complied with statutes applicable to the first mortgage broker business.   The bond was required by General Statutes § 36a-492(a).   The bond's terms included the following conditions:  (1) to proceed against the bond a person must provide Hartford in writing of Malik's failure to perform an agreement or commitment or wrongful conversion of funds “within ninety (90) days of the discovery of such occurrence,” and (2) no suit or action to recover under the bond will commence after the expiration of one (1) year following receipt of notice of failure or wrongful conversion by Malik's;  however, if there was any statute to the contrary, the limitation period would be deemed to be “equal to the minimum period of limitation permitted by such law.”

The affidavit of Thomas, which is not controverted by the Fusaros, has attached as Exhibit 2 an unsigned complaint, dated August 18, 2008, by the Fusaros against Malik's, Asif Malik and an attorney alleging as wrongful the same nine transactions beginning in November 2001 and ending in February 2006 as are set forth in the complaint in this case.   Thomas Affidavit, Exhibit 2, ¶ ¶ 15-24.¹

II. Scope of Review

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.”  Appleton v. Board of Education, 254 Conn. 205, 209 (2000).   Summary judgment “is appropriate only if a fair and reasonable person could conclude only one way.”  Miller v. United Technologies Corp., 233 Conn. 732, 751 (1985).  “The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to judgment as a matter of law.”  Appleton v. Board of Education, supra, 254 Conn. 209.  “A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Internal quotation marks omitted.)   United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379 (1969).   The trial court, in the context of summary judgment motion, may not decide issues of material fact, but only determine whether such genuine issues exist.  Nolan v. Borkowski, 206 Conn. 495, 500 (1983).

“Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact [question] ․ a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue.   It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.”  Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554 (1998).  “[T]he party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.”  Appleton v. Board of Education, supra, 254 Conn. 209.

III. Discussion

Hartford contends that summary judgment should be granted dismissing the complaint for several reasons, among those:  that notice to it was untimely and that the limitations period had expired.   With respect to notice, the undisputed facts are the Fusaros were aware of Malik's actions which they allege give rise to their claim in this case at least by August 19, 2008 when they filed the unsigned complaint setting forth those very actions.   Written notice was not given until June 2, 2009, well outside the ninety-day period.   Hartford's liability as surety under the bond is determined by the terms of the bond.  Goldberg v. Hartford Fire Ins., Co., 269 Conn. 550, 558 (2004) [quoting Southington v. Commercial Union Ins., Co., 254 Conn. 348, 358 (2000) ];  see other cases cited in Hartford's memorandum (April 16, 2010) at p. 12.   Provisions requiring compliance with notice provisions before recovering under a bond are enforceable.   See Balfour Beatty Construction, Inc. v. Colonial Ornamental Iron Works, Inc., 986 F.Sup. 82 (D.Conn.1997) [citing New Haven v. Eastern Paving Brick Co., 78 Conn. 689 (1906) ].

The plaintiffs do not contest the above dates, but assert that there are material unresolved facts pertaining to the notice provision;  however, they fail to specify what facts are unresolved, and fail to submit any affidavit setting forth an alternative set of facts.   In their memorandum the Fusaros state they notified Hartford “promptly” when they became aware of the existence of the bond and to enforce the ninety-day notice provision “would be unfair.”   Pl. Memorandum, July 21, 2010, p. 7. The notice provision is unambiguous about written notice being required within ninety days of discovery of the occurrence of events potentially covered by the bond;  it does not refer to discovery of the existence of the bond.   The court determines that summary judgment should enter based on late notice.

Hartford also contends that the Fusaros' claims are barred by the one-year limitations period set forth in the bond language.   The court disagrees, and determines that the statute of limitations period is governed by General Statutes § 38a-290 which states in relevant part:

No insurance company doing business in this state shall limit the time within which any suit shall be brought against it ․ on (1) a fidelity or surety bond to a period less than three years from the time the loss insured against occurs ․

Nevertheless, the last claim being alleged by the Fusaros occurred on or about February 1, 2006, Complaint, ¶ 25.   The complaint in this action is dated January 27, 2010 and served on Hartford on February 9, 2010, well over the three-year limitation period contained in the bond as modified by General Statutes § 38a-290.   Therefore, summary judgment for the defendant may be granted on the limitations ground as well.²

IV. Conclusion

The motion for summary judgment is granted and the complaint is dismissed.

SO ORDERED.

TAGGART D. ADAMS

SUPERIOR COURT JUDGE

FOOTNOTES

FN1. According to court records, the unsigned complaint was part of an application for prejudgment remedy in a case still pending in this court.   CV 08 5008479..  FN1. According to court records, the unsigned complaint was part of an application for prejudgment remedy in a case still pending in this court.   CV 08 5008479.

FN2. Hartford asserts additional grounds to dismiss some or all of the claims in the complaint.   These include the fact that the bond does not cover claims arising before March 11, 2004 when it came into existence, and that until 2008 the bond only covered first mortgage transactions.   Given the resolution of the notice and limitations arguments, these additional arguments are not addressed..  FN2. Hartford asserts additional grounds to dismiss some or all of the claims in the complaint.   These include the fact that the bond does not cover claims arising before March 11, 2004 when it came into existence, and that until 2008 the bond only covered first mortgage transactions.   Given the resolution of the notice and limitations arguments, these additional arguments are not addressed.

Adams, Taggart D., J.