Crosby's Northeast Foundation, Inc. v. R.B. Benson and Company, Inc. (2013)

MEMORANDUM OF DECISION

BACKGROUND

On June 8, 2011, the plaintiff filed a petition of bankruptcy under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Connecticut, which remains pending.   On June 16, 2011, the plaintiff filed a certificate of lien on the land records of the town of Westport asserted against the defendant.

In a complaint dated June 13, 2012, the plaintiff seeks, among other relief, foreclosure of a mechanic's lien against the defendant.   The defendant has filed a motion to dismiss the action for lack of subject matter jurisdiction.   The basis of the motion is that, upon filing the voluntary petition for bankruptcy, the plaintiff no longer possessed standing to perfect the lien or the right to foreclose upon it.

The plaintiff did not file an objection to the motion to dismiss.   However, the defendant argued against the motion at a hearing on July 1, 2013.

LEGAL STANDARD

Practice Book § 10–31 provides that a motion to dismiss may assert lack of subject matter jurisdiction.  “[T]he question of subject matter jurisdiction, because it addresses the basic competency of the court, can be raised by any of the parties, or by the court sua sponte, at any time.”  (Internal quotation marks omitted.)  Webster Bank v. Zak, 259 Conn. 766, 774, 792 A.2d 66 (2002).  “A motion to dismiss admits all facts well pleaded and invokes any record that accompanies the motion, including supporting affidavits that contain undisputed facts.”  (Internal quotation marks omitted.)  Henriquez v. Allegre, 68 Conn.App. 238, 242, 789 A.2d 1142 (2002).  “Jurisdiction of the subject-matter is the power [of the court] to hear and determine cases of the general class to which the proceedings in question belong ․ In other words, [s]ubject matter jurisdiction involves the authority of a court to adjudicate the type of controversy presented by the action before it ․ A court does not truly lack subject matter jurisdiction if it has competence to entertain the action before it ․ Once it is determined that a tribunal has authority or competence to decide the class of cases to which the action belongs, the issue of subject matter jurisdiction is resolved in favor of entertaining the action ․ It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged ․” (Citations omitted;  internal quotation marks omitted.)  New England Pipe Corp. v. Northeast Corridor Foundation, 271 Conn. 329, 334–35, 857 A.2d 348 (2004).

ANALYSIS

The issue presented to the court is whether, upon filing a petition for bankruptcy, the plaintiff was dispossessed of standing to pursue the mechanic's lien.   Upon the filing of a petition under Chapter 11, an estate is created consisting, inter alia, of “all legal or equitable interests of the debtor in property as of the commencement of the case.”  11 U.S.C. § 541(a)(1).   A debtor in possession is created for the bankruptcy estate and the debtor in possession generally has all the rights of a bankruptcy trustee.  11 U.S.C. § 1107.

On the date of filing the bankruptcy petition, any potential claim or cause of action which the plaintiff had against the defendant automatically accrued to the debtor in possession of the bankruptcy estate.   See Eastman v. Union Pacific Railroad Company, 493 F.3d 1151 (10th Cir., 2007).   Therefore, as of June 8, 2011, the plaintiff had no standing to perfect the mechanic's lien and no standing to pursue foreclosure of the mechanic's lien.

Further, this action should be precluded as a matter of public policy, whether the claim be choate or inchoate.  “Judicial estoppel is particularly appropriate where, as here, a party fails to disclose an asset to a bankruptcy court, but then pursues a claim in a separate tribunal based on that undisclosed asset.”  Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 600 (5th Cir.2005).   This court recognizes that our Supreme Court has not yet taken this step where the intent or motive of the debtor is unknown.  Association Resources, Inc. v. Wall, 298 Conn. 145, fn. 28, 2 A.3d 873 (2010).

The defendant raised an alternative ground for dismissal and the plaintiff argued in favor of its opposite at the hearing.   Therefore, the court also addresses the issue of standing of the debtor in interest.   To the extent that the debtor in interest may have had standing over this particular lien, over one year has passed since the filing of the certificate of lien on the land records.   As the debtor in interest of the bankruptcy estate did not pursue foreclosure of this particular mechanic's lien within one year of recording of the lien on the land records, it is precluded from pursuing foreclosure of the lien.   See General Statutes §§ 49–39 ¹ and 49–40a.²

ORDER

The defendant's motion to dismiss (127.00) is granted.

Robert E. Young, Judge

FOOTNOTES

FN1. General Statutes § 49–39.   Time limitation of mechanic's lien.Action to foreclose privileged.   A mechanic's lien shall not continue in force for a longer period than one year after the lien has been perfected, unless the party claiming the lien commences an action to foreclose it, by complaint, cross-complaint or counterclaim, and records a notice of lis pendens in evidence thereof on the land records of the town in which the lien is recorded within one year from the date the lien was recorded ․ Each such lien, after the expiration of the one-year period ․ without action commenced and notice thereof filed as aforesaid, shall be invalid and discharged as a matter of law ․.  FN1. General Statutes § 49–39.   Time limitation of mechanic's lien.Action to foreclose privileged.   A mechanic's lien shall not continue in force for a longer period than one year after the lien has been perfected, unless the party claiming the lien commences an action to foreclose it, by complaint, cross-complaint or counterclaim, and records a notice of lis pendens in evidence thereof on the land records of the town in which the lien is recorded within one year from the date the lien was recorded ․ Each such lien, after the expiration of the one-year period ․ without action commenced and notice thereof filed as aforesaid, shall be invalid and discharged as a matter of law ․

FN2. General Statutes 49–40a.   Mechanic's liens expired by limitation of time.Any mechanic's lien which has expired because of failure to comply with the time limitations of section 49–39 is automatically extinguished and the continued existence of the lien unreleased of record in no way affects the record owners title nor the marketability of the same..  FN2. General Statutes 49–40a.   Mechanic's liens expired by limitation of time.Any mechanic's lien which has expired because of failure to comply with the time limitations of section 49–39 is automatically extinguished and the continued existence of the lien unreleased of record in no way affects the record owners title nor the marketability of the same.

Young, Robert E., J.