Gheorghe Breahna v. Massimo Tabacco et al. (2012)

MEMORANDUM OF DECISION

This action arises out of a complaint filed by the plaintiff, Gheorghe Breahna, against the defendants Massimo Tabacco and Giuseppe Pace (“defendants”) alleging that the defendants defaulted on a promissory note.   On July 10, 2012, the parties executed a stipulation of facts for trial as follows:

The plaintiff, Gheorghe Breahna, and Defendants Giuseppe Pace and Massimo Tabacco, hereby stipulate that the following material facts are true and accurate and, together with legal arguments to be presented by counsel and the self-represented party, shall serve as the basis on which this civil action is to be tried to the Court on July 12, 2012.

1. The Plaintiff is an individual who, in 2008, was employed as an assistant manager of a bank.

2. The Defendants are individuals who, in 2008, were self-employed in the restaurant business, and were members of Rome, LLC, a Connecticut limited liability company.

3. In 2008, Rome, LLC operated a restaurant at 269 Fairfield Avenue, Bridgeport, Connecticut, doing business as Café Roma.

4. On or about July 2, 2008, the Plaintiff loaned the sum of $50,000.00 to Rome, LLC.

5.  On or about July 2, 2008, acting in their respective capacities as members of Rome, LLC, Defendants Pace and Tabacco executed a promissory note on behalf of Rome, LLC, in favor of the Plaintiff, in the original principal amount of $50,000.00 (the “Note”) for a term of 22 months at an implied interest rate of 16.5 percent per annum, which called for loan payments totaling $66,500 at maturity.   A copy of the Note is annexed hereto and made a part hereof.

6. Neither the Plaintiff nor the Defendants consulted with counsel before executing the Note, which was drafted without the assistance of counsel.

7. English is a second language for the Plaintiff, whose mother tongue is Romanian, and for the Defendants, whose mother tongue is Italian.

8. Rome, LLC defaulted on the Note.

9. After defaulting on the Note, Rome, LLC filed a voluntary Chapter 11 bankruptcy petition on January 26, 2009, which was converted to a Chapter 7 liquidation on March 1, 2010, Case No. 09–50123 (AHWS) in the United States Bankruptcy Court for the District of Connecticut.

10. On May 6, 2011, the Chapter 7 Trustee filed a report of no distribution, as there were insufficient assets to administer, with all claims, including the claim of the Plaintiff, being discharged without payment.

11. In the Note, Rome, LLC purportedly granted “a security interest to [the Plaintiff] on all fixtures and kitchen equipment located in 269 Fairfield Avenue, Bridgeport, CT 06604, the reasonable value of which is $80,000.00.”

12. The Plaintiff did not perfect the security interest by filing a UCC–1 financing statement with the Secretary of State or in any other manner provided under the provisions of Article 9 of the Uniform Commercial Code.

13. In the Note, the Defendants purportedly granted the Plaintiff a “security interest in any personal property they own as individuals, the value of which will be equal to the amount due.”

14. The Plaintiff did not perfect the security interest in the personal property of either one of the Defendants by filing a UCC–1 financing statement with the Secretary of the State or in any other manner provided under the provisions of Article 9 of the Uniform Commercial Code.

15. The Plaintiff does not claim that it has an enforceable security interest in the property of Rome, LLC or in the individual personal property of either one of the Defendants.

16. The Plaintiff is the holder of the Note.

17. The only claim on which the Plaintiff is proceeding to trial is the claim that the Defendants are personally liable to him as accommodation makers of the Note, which claim the Defendants deny.

The case was tried before the court on July 12, 2012.¹  In addition to the foregoing stipulation of facts that was provided to the court, the evidence consisted of one lone exhibit, the Note, identified as plaintiff's exhibit number 1 full exhibit, which sets forth the Note's terms and conditions as the plaintiff's signature as “Lender” and the defendants' signatures as “Members.”   The Note provides as follows:

Rome, LLC, doing business as Café Roma, hereby promises to pay Mr. Gheorghe Breahna the sum of U.S. Dollars 66,500.00, in weekly installments of $750.00, which includes the interest of 750 $/month, until paid in full. (22 months)

The payments will be made with money orders payable to Gheorghe Breahna and will be recorded and signed by both parties upon receipt on every Friday.   Both parties will keep such records and only documents signed by both Mr. Gheorghe Breahna and Mr. Massimo Tabacco will represent proof of payment.

This represents payment of a $50,000.00 loan obtained by the undersigned members of Rome L.L.C. from Gheorghe Breahna (see attachment 1) Rome L.L.C. grants hereby a security interest to Mr. Gheorghe Breahna, on all fixtures and kitchen equipment located at 269 Fairfield Avenue, Bridgeport, CT 06604, the reasonable value of which is $80,000 (see attachment 2).

Also Mr. Massimo Tabacco and Mr. Giuseppe Pace grants Mr. Gheorghe Breahna security interest in any personal property they own as individuals, the value of which will equal the amount due.

In the event Rome L.L.C., Massimo Tabacco or Giuseppe Pace fail to comply with the aforementioned payment schedule, the securities mentioned in this note will become sole property of Mr. Gheorghe Breahna no later than 30 days from the missed payment.   The undersigned will fully cooperate with Mr. Gheorghe Breahna and his legal representatives until such a transfer of ownership will take effect.

The applicable statute is Section 42a–3–419 of the General Statutes.   Under subsection (a) of said section, it provides, in pertinent part:

If an instrument is issued for value given for the benefit of a party to the instrument (“accommodated party”) and another party to the instrument (“accommodation party”) signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party “for accommodation”.

The intention of the parties is an important factor to consider when determining accommodation status.  Kerney v. Kerney, 120 R.I. 209, 214, 386 A.2d 1100, 1102 (1978);  Dalton v. George B. Hately Co., Inc., 634 S.W.2d 374, 378 (Tex.App.1982);  Utah Farm Production Credit Assn. v. Watts, 737 P.2d 154, 158 (Utah 1987).  “[I]t is a question of the intention of the person claimed to be an accommodation party, the person who would be the accommodated party, and the person who was the holder of the paper when the alleged accommodation party signed.”  (Emphasis in original.)  Utah Farm Production Credit Assn. v. Watts, supra;  6 R. Anderson, Uniform Commercial Code (3d Ed.) § 3–415:16.   The intention of the parties as to accommodation status is a factual issue.   See MacArthur v. Cannon, 4 Conn.Cir.Ct. 208, 214, 229 A.2d 372 (1967).   As such, it is within the sole province of the trier of fact to decide.  Tyers v. Coma, 214 Conn. 8, 12–13, 570 A.2d 186 (1990).

“While the plaintiff is entitled to every favorable inference that may be legitimately drawn from the evidence, and has the same right to submit a weak case as a strong one, the plaintiff must still sustain the burden of proof on the contested issues in the complaint and the defendant need not present any evidence to contradict it.”  Lukas v. New Haven, 184 Conn. 205, 211 (1981).   The general burden of proof in civil actions is on the plaintiff, who must prove all the essential elements of their cause of action by a fair preponderance of the evidence.  Gulycz v. Stop & Shop, 29 Conn.App. 519, 523, cert. denied, 224 Conn. 923 (1982).   Failure to do so results in judgment for the defendant.

In the instant matter, there was no testimony by the parties or any witnesses.   Apart from the parties' stipulated facts, opening statements, oral arguments and closing statements, the only evidence introduced at trial consisted of the Note, which was marked as plaintiff's exhibit number one, full exhibit.   Thus, the case turns on whether the plaintiff met his burden of proof by a fair preponderance of the evidence to support his claim that the parties intended for the defendants to sign the Note as accommodation makers.

Upon a review of the parties' stipulated facts and the Note, the court makes additional findings of fact.   The maker of the Note is Rome, L.L.C., doing business as Café Roma. The parties' stipulated facts does not contain anything about the plaintiff's intention or, for that matter, the defendants' intentions to sign the Note as accommodation makers but it does state that the defendants deny being liable to the plaintiff as accommodation makers of the Note. The plaintiff signed the Note as “Lender” and each defendant signed as “Members.”   No other signatures of any of the parties are in the Note and the Note is silent about the parties' intentions with respect to the effect of the defendants' signature or whether the defendants signed the Note as accommodation makers.

On one hand, the expressed language of the Note seems to suggests that the defendants may have signed the Note as accommodation makers because the Note states, in pertinent parts, that “[t]his represents payment of a $50,000.00 loan obtained by the undersigned members of Rome L.L.C. from Gheorghe Breahna ․,” “[a]lso Mr. Massimo Tabacco and Mr. Giuseppe Pace grants security interest in any personal property they own as individuals” and “[i]n the event Rome L.L.C., Massimo Tabacco or Giuseppe Pace fail to comply with the aforementioned payment schedule.”   Although the Note clearly states that the loan monies were obtained by the members of Rome L.L.C., it does not provide that the defendants, in their individual capacity, received any of the value from the loan proceeds.   And, this would appear to indicate that General Statutes Section 42a–3–419 would be triggered provided the parties intended that the defendants would sign the Note as accommodation makers.   But on the other hand, it is clear from the face of the Note the defendants signed as “Members” of Rome L.L.C. and it was Rome L.L.C., and not the defendants, that promised to pay the loan.

Because the Note is rife with inconsistencies concerning the parties' personal obligations under the terms and conditions of the Note, and in light of the fact that defendants denied that they signed as accommodation makers in the parties' stipulation of facts, the court is not persuaded that the parties intended the defendants to sign as accommodation makers on the Note. Based upon the foregoing, the court finds that the plaintiff failed to meet its burden of proof.   Therefore, the court hereby enters judgment against the plaintiff and judgment in favor of the defendants.

BY THE COURT

SYBIL V. RICHARDS, JUDGE

FOOTNOTES

FN1. The plaintiff's attorney posited, during oral argument at the trial, that instead of a trial, the motion for summary judgment is in effect the trial.   However, the court's file indicates that both the plaintiff and the defendant filed a “motion for permission to file a summary judgment motion—case on assigned list PB Sec 17–44,” identified as plaintiff's motion numbered 125.00 and defendant's motion numbered 126.   J. Bellis denied the plaintiff's motion and defendants' motion on June 18, 2012 and June 26, 2012, respectively.   Therefore, the court neither considered nor afforded any weight to either motion filed by the respective parties for purposes of the trial..  FN1. The plaintiff's attorney posited, during oral argument at the trial, that instead of a trial, the motion for summary judgment is in effect the trial.   However, the court's file indicates that both the plaintiff and the defendant filed a “motion for permission to file a summary judgment motion—case on assigned list PB Sec 17–44,” identified as plaintiff's motion numbered 125.00 and defendant's motion numbered 126.   J. Bellis denied the plaintiff's motion and defendants' motion on June 18, 2012 and June 26, 2012, respectively.   Therefore, the court neither considered nor afforded any weight to either motion filed by the respective parties for purposes of the trial.

Richards, Sybil V., J.