Geoffrey Chambers v. Walter A. Stewart, Jr. (2012)

MEMORANDUM OF DECISION

Plaintiff has a three-count complaint which alleges that two mortgages which the defendant holds on the plaintiff's home are invalid because they violate the automatic orders (hereinafter “orders”) which were entered at the commencement of the dissolution action between the plaintiff and his former spouse and were in effect at the time the mortgages were given.   For a second count the plaintiff alleges that the defendant's refusal to release these mortgages constitutes tortuous interference with the sale of the marital home and slander of title to the property.

With a return date of August 12, 2003 the plaintiff's former spouse commenced a dissolution action against the plaintiff.   In accordance with P.B. § 25–5 the prescribed orders were attached to the complaint and the plaintiff was duly served.   During the pendency of the action, in apparent contravention of the order, the plaintiff's spouse executed and delivered two mortgages to the defendant, the first on March 18, and the second on April 14, 2005.   On June 19, 2009 the plaintiff acquired his former wife's one-half interest by quit-claim deed thus becoming the owner of the entire fee.   On July 27, 2009 the plaintiff entered into a written contract for the sale of the marital home which provides for a closing no later than July 31, 2012.   In anticipation of the closing, the plaintiff demanded that the defendant release the mortgages so that he may convey clear title.   The defendant refused and this lawsuit ensued.

There is no dispute that the defendant had actual knowledge of the pendency of the dissolution action at the time he made the mortgage loans.   On the other hand, there is persuasive evidence that he was unaware of the existence of the orders.   The plaintiff argues that he was put on notice of the orders constructively by virtue of a lis pendens which the plaintiff's wife filed in the dissolution action on August 4, 2003.   The defendant admits that he had notice of everything that was in the dissolution file at the time but argues that such notice is immaterial because the orders had no effect on the mortgages.   Thus, the court must determine whether the orders were binding on the defendant or binding on the plaintiff's wife to the extent that her act of encumbering the property was a nullity.   Apparently, the binding effect of such order on third parties is an issue of first impression in Connecticut.

Whether the orders prescribed by P.B. § 25–5 are binding on third parties who have constructive notice of their content requires the application of principles of statutory construction as well as analysis of the language employed in the order itself.

The necessary starting point in the analysis is the language employed:  Section 25–5(a)(1) provides as follows:  “(1) Neither party shall sell, transfer, encumber (except for the filing of a lis pendens), conceal, assign, remove, or in any way dispose of, without the consent of the other party in writing, or an order of a judicial authority, any property, individually or jointly held by the parties, except in the usual course of business or for customary and usual household expenses or for reasonable attorneys fees in connection with this action.”

Clearly the mortgages in question were “encumbrances” within the meaning of the rule.   It is noteworthy that neither party offered any evidence with regard to whether these mortgages qualified under any of the exceptions to the Rule 25–5 prohibitions.

Subsection 11(b) the rule provides as follows:

“The automatic orders of a judicial authority as enumerated in subsection (a) shall be set forth immediately following the party's requested relief in any complaint for dissolution of marriage or civil union, legal separation, or annulment, or in any application for custody or visitation, and shall set forth the following language in uppercase letters:  FAILURE TO OBEY THESE ORDERS MAY BE PUNISHABLE BY CONTEMPT OF COURT.   IF YOU OBJECT TO OR SEEK MODIFICATION OF THESE ORDERS DURING THE PENDENCY OF THE ACTION, YOU HAVE THE RIGHT TO A HEARING BEFORE A JUDGE WITHIN A REASONABLE TIME.”

Section 46b–80(a), the matrimonial lis pendens statute, provides in pertinent part:  “Such notice shall, from the time of the recording only, be notice to any person thereafter acquiring any interest in such property of the pendency of the complaint or application.   Each person whose conveyance or encumbrance is subsequently executed or subsequently recorded or whose interest is thereafter obtained by descent, or otherwise, shall be deemed to be a subsequent purchaser or encumbrancer, and shall be bound by all proceedings taken after the recording of such notice, to the same extent as if he were made a party to the complaint or application.”

Thus, in Connecticut a person does not have to be joined as a party in order to be bound by the proceeding which is the subject of the lis pendens.   So, once the mortgages in question attached to the wife's half interest, the defendant became a subsequent encumbrancer and thereby became “bound by all proceedings” without the necessity of joinder as a party.   Nevertheless, the fact that the lis pendens bound him to all proceedings does not ipso facto make him subject to the prohibitions contained in the rule.   Whether the rule operated to vitiate the mortgages depends upon whether the rule impliedly affects third parties because it clearly does not do so expressly.

Because there is no judicial precedent to guide the court in its analysis it is appropriate to turn to case law which has developed on the subject of whether a statute, without expressly creating a private right of action, does so implicitly.   In the present case, it must be determined whether the law imposes a duty upon a third party to refrain from participating in any of the acts prohibited by the rule and therefore creates a correlative right in this plaintiff as the presumptively injured party to enforce the prohibition against the defendant.   Since the jurisprudence governing the creation of a duty of care in the field negligence law is clearly inapplicable here, the court turns to the principles found in the private remedy cases for guidance.

In Provencher v. Enfield, 284 Conn. 772, 778 (2007), our Supreme Court summarized the private remedy rule as follows:  “In determining whether a private remedy is implicit in a statute not expressly providing one, several factors are relevant.   First, is the plaintiff one of the class for whose ․ benefit the statute was enacted ․ ? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one?  ․ Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?”  (Internal quotation marks omitted.)  Napoletano v. CIGNA Healthcare of Connecticut, Inc., 238 Conn. 216, 249, 127 (1996), cert. denied, 520 U.S. 1103 (1997).

The initial inquiry therefore is:  is the defendant a member of the class which the rule was designed to reach?   In the current case it is undisputed that the rule is silent as to whether it applies to third parties.   The court must therefore determine whether the rule creates such a duty by implication.   In examining the three-prong test the court is aware that these three prongs “overlap with each other in that the ultimate question is whether there is sufficient evidence that the legislature (the enacting authority) intended” to impose a duty on third parties with a correlative right in the other party to a dissolution action to enforce that duty, “having failed expressly to provide for one.”  Provencher v. Enfield, 284 Conn. at 779.   To answer the above question the court must look “to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter.”  Id. at 778–79.

When a word is not defined in a statute it is appropriate to resort to the dictionary definition.  Kelo v. City of New London, 268 Conn. 1, 17 (2004).  “Initially [the court] notes that Practice Book provisions are interpreted in accordance with the same principles that guide interpretation of our General Statutes.”  State v. Strickland, 243 Conn. 339, 347 (1997).

“When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature ․ In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply ․ In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes.   If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.”  Weems v. Citigroup, Inc., 289 Conn. at 778–79.

The beginning point in the analysis therefore is the express language of Rule 25–5(a)(1).   The title of the rule is “Automatic Orders upon Service of the Complaint or Application.”   The word automatic means “done without a conscience thought or volition, as if mechanical or from force of habit.”   Webster's New World Dictionary, Second College ed. at 195.   Accordingly, it is apparent in enacting the rule that the Judges of the Superior Court intended to create a mechanism in every dissolution case to accomplish routinely what formerly required a flurry of motions, thus substantially reducing the number of motions regularly filed at the commencement of a dissolution action.¹

Additionally, it is appropriate to look to other Practice Book Rules which comprise a statutory scheme to assist in ascertaining legislative intent.   Provencher v. Enfield, 284 Conn. at 781–82.   The purpose of our Practice Book Rules is to regulate “pleading, practice and procedure in judicial proceedings in courts in which they [Superior Court] have the constitutional authority to make rules for the purpose of simplifying proceedings in the courts and of promoting the speedy, and efficient determination of litigation upon the merits.”  State v. King, 187 Conn. 292, 297 (1982).

Section 1–1(a) of the Practice Book identifies the “Scope of Rules” as “The rules for the superior court govern the practice and procedure in the superior court in all civil and family actions whether cognizable as cases at law, in equity, or otherwise ․”

In directing that the rules be liberally construed, Sec. 1–8 states that “the design of these rules being to facilitate business and advance justice.”   It is evident from both the text of the rules and their purpose as enunciated by our Supreme Court in State v. King, that Rule 25–5(a)(1) was designed to simplify and regularize family practice by creating a standard procedure for the preservation of marital assets, among other things.

There is nothing in either the Rule or in Form JD–FM–158 which expressly imposes a duty on third parties to take notice of or abide by the prohibitions contained in the rule.   It is undeniable that the Judges of the Superior Court could easily have added language to the rule to indicate that the automatic order was indeed intended to be binding on third parties.  Provencher v. Enfield, 284 Conn. at 785, supra.   In fact, a contrary intention appears from the fact that the rule making authority has chosen the remedy of a contempt proceeding as a means of enforcement and have said so in bold upper case letters.   Thus, it is fair to infer that the automatic order was designed for no other purpose than to control the conduct of the parties during the pendency of the action.

This result finds support in California caselaw wherein a similar rule exists.   In Gale v. Superior Court, 19 Cal.Rptr. 554 (2004) the Court of Appeals held that the filing and recording in the land records of a lis pendens pursuant to a divorce action was not binding on the third party purchaser of marital property because the third-party was not formally joined in the action and therefore did not have notice required by basic due process.   Notwithstanding, this court does not believe that in Connecticut such an analysis is necessary.

There is another reason why Rule 25–5 does not invalidate these mortgages.   As part of the dissolution proceeding both the plaintiff and his wife entered into an agreement on June 24, 2005 in which the plaintiff expressly acknowledged the mortgages and therein agreed that the wife's share of the proceeds of the sale of the marital home would be used to pay off the defendant's mortgages.   Then again on September 12, 2005 in a modification agreement the plaintiff reiterated his recognition of the obligation of the wife to pay the mortgage loans and finally on May 10, 2007 in his postjudgment “Motion For Order Of Set–Off” he represents to the court the following at paragraph 8:  “In order to sell the marital home, the defendant will have to pay over to Walter Stewart $150,000 plus interest.”   At trial, the plaintiff referred to this and other debts mentioned in the agreement as “valid claims.”   If under Section 46b–80(a) the defendant in the current action is bound by everything that occurred in the dissolution action then by the same reasoning he should be entitled to rely upon the plaintiff's statements as contained in the filings in that action.   On the basis of these facts the defendant argues that the plaintiff may not assert priority as owner of the fee over the mortgage rights of the defendant.

Although not precisely alleged, by the defendant in his answer and special defenses, such conduct constitutes a waiver.

“Waiver is the intentional relinquishment of a known right.  National Transportation Co. v. Toquet, 123 Conn. 468, 475;  Mishiloff v. American Central Ins. Co., 102 Conn. 370, 382;  MacKay v. Aetna Life Ins. Co., 118 Conn. 538, 547;  Phoenix Mutual Life Ins. Co. v. Brenckman ... 148 Conn. 391, 396;  Jenkins v. Indemnity Ins. Co., 152 Conn. 249, 257.  “To constitute waiver there must be both knowledge of the existence of the right and intention to relinquish it.  Hoxie v. Home Ins. Co., 32 Conn. 21, 40.”   Breen v. Aetna Casualty & Surety Co., 633, 645 Waiver” involves the idea of assent, and assent is an act of understanding.   This presupposes that the person to be affected has knowledge of his rights, but does not wish to assert them.   Intention to relinquish must appear.”  MacKay v. Aetna Life Ins. Co., 118 Conn. 538, 547 “[W]here one lacks knowledge of a right there is no basis upon which a waiver of it can rest.  Taylor v. Lounsbury–Soule Co., 106 Conn. 41, 59;  O'Connor v. Metropolitan Life Ins. Co., 121 Conn. 599, 609;  MacKay v. Aetna Life Ins. Co., 118 Conn. 538, 547;  National Transportation Co. v. Toquet, 123 Conn. 468, 475.   Waiver does not have to be express but “may consist of acts or conduct from which waiver may be implied.   Andover v. Hartford Accident & Indemnity Co., 153 Conn. 439, 445.   In other words, waiver may be inferred from the circumstances if it is reasonable so to do so.  DiFrancesco v. Zurich General Accident & Liability Ins. Co., 105 Conn. 162, 168;  Breen v. Aetna Casualty & Surety Co., supra 646 (dissenting opinion).”  (Alternate citations omitted.)  Novella v. Hartford Accident and Indemnity Company, 163 Conn. 552, 562 (1972).

As noted above, the defendant has not expressly alleged waiver as a special defense.   Where however “facts are sufficiently set up in a pleading to warrant the inference of waiver, it will be considered though it is not expressly alleged.”  Jenkins v. Indemnity Insurance Co., 152 Conn. 249, 256 (1968).   Here, the denials in the answer and the text of the special defenses, especially the second and fourth special defenses contain allegations material to a claim of waiver.   Certainly, the defendant treated the plaintiff's conduct as waiver at pages 3, 4 and 5 of his trial brief and the plaintiff had the right to respond to that in his reply brief.   The facts which the defendant proved at trial relating to the plaintiff's conduct in the dissolution which was unequivocal and inconsistent with his present attempt to invalidate the mortgages some two years later, constitute a knowing relinquishment of the right which he seeks to assert in this proceeding.   Action which is inconsistent with a party's position in a lawsuit accompanied by evidence of intent to waive that position on a prior occasion must be held to be a waiver as a matter of law.  Arton v. Liberty Mutual Insurance Company, 163 Conn. 127, 138 (1992).

The court's conclusion that Rule 25–5 creates a correlative right and duty is buttressed by the decision of the Appellate Court in Clark v. Clark, 115 Conn.App. 500 (2009) in which a mortgage on a spouse's half interest in the marital home was deemed not to constitute a direct and substantial interest in the subject matter of the dissolution action notwithstanding that the mortgage had been approved by the court as an exception under Sec. 25–5(a)(1).   Thus, the plaintiff would have no colorable claim to intervene in the dissolution action.   See Kerrigan v. Commissioner of Public Health, 279 Conn. 447, 449 n.3 (2006).   One could only imagine the effect upon the orderly progress of dissolution actions if mortgagees of marital property were allowed to join the matrimonial fray.   If the interest of a mortgagee could be invalidated by an automatic order in a dissolution case and the mortgagee under the Clark holding could not intervene yet find himself bound by the proceeding, obvious due process rights would be affected.

In the present case, the defendant has an even more attenuated interest than the proposed intervenor in Clark because the debt which the mortgage secured was not one for which exemption was sought under the rule.   On the other hand, just as in Clark the underlying debt remains viable and the mortgage forecloseable regardless of the outcome of the dissolution and regardless of who owns equitable title to the property.

Because the court has determined that the automatic order did not invalidate the defendant's mortgages and that the plaintiff has waived his right to assert its invalidity (first count) there can be no tortuous interference with the plaintiff's contract to sell the marital home (second count), Ex. 20.   By the same reasoning there can no slander of title (third count).

Judgment may enter for the defendant on all counts of the complaint.

BY THE COURT

A. William Mottolese, J.T.R.

FOOTNOTES

FN1. 7 Conn. Practice Series 20:2 at p. 240..  FN1. 7 Conn. Practice Series 20:2 at p. 240.

Mottolese, A. William, J.T.R.