Torrington Municipal & Teachers F.C.U. v. Andrew Whitford et al. (2010)

MEMORANDUM OF DECISION

This motion for summary judgment (# 123) presents two issues:  1) whether the plaintiff, who is the holder of a security interest in a motor vehicle, may bring an action against the defendant tortfeasor for negligently damaging the collateral;  2) whether the plaintiff's settlement in full with the co-defendant debtor bars this action against the tortfeasor.   For the reasons given below, the answer to the first question is Yes and the answer to the second question is No.

In the second amended complaint dated September 26, 2008, the plaintiff, Torrington Municipal & Teachers Federal Credit Union, alleges that it loaned $9,476.00 to the co-defendant, Andrew Whitford (“Whitford”), and secured the loan with a Ford pickup truck.   In the first count, the plaintiff sets forth a simple claim for recovery from Whitford following his default in making the installment payments.   On February 4, 2009 the court entered judgment against Whitford in accordance with the stipulation of the parties for the full amount due the plaintiff, with payments to be made pursuant to a monthly payment schedule.   In the second count, the plaintiff alleges that the secured pickup truck was destroyed as a result of the negligence of the defendant, John J. Santarsiero (“Santarsiero”) in towing the truck as a favor to Whitford.¹  Santarsiero denies negligence and sets forth a special defense that Whitford's failure to make the installment payments on his promissory note was the superseding intervening cause of the plaintiff's damage.

Santarsiero has moved for summary judgment on two grounds:  1) Santarsiero did not owe a duty to the plaintiff upon which a claim for negligence can be based;  and 2) the plaintiff has elected a remedy by having obtained judgment for the full amount against Whitford and is precluded from pursuing this claim against Santarsiero.   His motion for summary judgment is supported with a memorandum of law, deposition transcripts, copies of the loan documents, and a copy of the notice of stipulated judgment against Whitford.   The plaintiff has filed a memorandum in opposition to the motion for summary judgment without supporting documentation.

Neither party cited any authority on the issue of whether the holder of a security interest in personal property may bring an action against a third-party tortfeasor to recover for damage to the secured property.   The court has done its own research and has been unable to find any Connecticut authority on this issue.   However, there is significant authority from other jurisdictions and from scholarly commentary that a secured party is generally permitted to bring its own claim against a tortfeasor who negligently damages the collateral.   See, e.g., Baldwin v. Marina City Properties, Inc., 145 Cal.Rptr. 406, 411 (Cal.1978);  Atlantic Coast Line R.R. v. Rutledge, 165 So. 563, 564 (Fla.1935);  Stotts v. Puget Sound Traction, Light & Power Co., 162 P. 519, 520-21 (Wash.1917);  International Harvester Credit Corp. v. Valdez, 709 P.2d 1233, 1235 (Wash.Ct.App.1985);  68 Am.Jur.2d Secured Transactions § 100 (2003);  79 C.J.S. Secured Transactions § 161 (2006);  Amanda K. Esquibel, An Article 9 Primer Regarding Uninsured Collateral Destroyed by a Tortfeasor, 46 U. Kan. L.Rev. 211 (1998).   The court also found an interesting discussion of why Article Nine of the UCC, when read in the light of pre-Code law, should permit a secured lender to sue for the entire damage to the collateral and to hold any recovery in excess of the debt as a fiduciary for the debtor.   Secured Party's Right to Sue Third Persons for Damage to or Defects in Collateral, 81 Com. L.J. 449, 447-48 (1976).

Despite this authority, Santarsiero argues that he cannot be liable to the plaintiff because there is no privity between him and the plaintiff.   It is not clear why this should make any difference in this tort claim.   There is no privity between the plaintiff and defendant in most tort cases.   A duty to use due care can arise in many circumstances other than those that involve privity between the parties.   A duty to use care exists when a reasonable person, knowing what the defendant here either knew or should have known, would foresee that harm of the same general nature as that which occurred here was likely to result from that conduct.  Coburn v. Lenox Homes, Inc., 186 Conn. 370, 375 (1982).   Here, the plaintiff claims that Santarsiero was negligent in towing the collateral by failing to secure it properly.   There is certainly a genuine issue of material fact as to whether it was foreseeable to Santarsiero that failure to exercise due care in towing the truck would result in damage to the owner or anyone with a security interest.  “The moving party for summary judgment has the burden of showing the absence of any genuine issue of material fact ․” (Internal quotation marks omitted.)  Gould v. Mellick & Sexton, 263 Conn. 140 (2003).   Santarsiero has failed to show that he did not owe the plaintiff a duty of care in towing the truck.   For this reason, the trial of fact must determine the issue.

The second argument made by Santarsiero is that the plaintiff is precluded from pursuing this claim against him because the plaintiff has entered into a stipulated judgment with the debtor, Whitford, on the first count.   The court file reflects that the plaintiff and Whitford agreed to a judgment for the full amount of the plaintiff's claim, and that this judgment is to be paid at the rate of $250 per month beginning on April 12, 2009.   Although there is no supporting documentation, Santarsiero claims in his brief that Whitford has been making regular payments.   The plaintiff did not object to this representation in its brief.   Santarsiero argues that these facts constitute an “election of remedies” which precludes further action against him.

“The doctrine of election of remedies is equitable in nature, and its purpose is not to prevent recourse to any remedy, but to prevent double redress for a single wrong.   25 Am.Jur.2d, Election of Remedies § 1;  see also National Transportation Co. v. Toquet, 123 Conn. 468, 479, 196 A. 344 (1937).”  Marsh v. Washburn, 11 Conn.App. 439, 447 (1987).   Although a party has a right to plead alternative theories of liability, there is no right to seek inconsistent remedies that could result in double recovery.  Teglia v. Zanesky, 67 Conn.App. 447, 456 (2001).   That is not a risk under the facts of this case.   If the plaintiff obtains a recovery in excess of the balance due on the debt, that excess will not go to the plaintiff, but is held by the plaintiff as a fiduciary for Whitford.   For this reason, there is no chance of a double recovery by the plaintiff, and the doctrine of the election of remedies does not apply.

For the reasons set forth above, the motion for summary judgment is denied.

BY ORDER OF THE COURT

John W. Pickard, J.

FOOTNOTES

FN1. The defendant has not raised the issue of whether Santarsiero was negligent as a ground for summary judgment.   For this reason, the court will assume that Santarsiero was negligent for purposes of this motion despite the fact that the file does not indicate that the plaintiff has disclosed an expert on the issue of negligence in the towing of a truck of this sort..  FN1. The defendant has not raised the issue of whether Santarsiero was negligent as a ground for summary judgment.   For this reason, the court will assume that Santarsiero was negligent for purposes of this motion despite the fact that the file does not indicate that the plaintiff has disclosed an expert on the issue of negligence in the towing of a truck of this sort.

Pickard, John W., J.