Jamie Lee Aponte v. LLC (2014)

MEMORANDUM OF DECISION

This is the defendant, Richard Scheiman's motion for summary judgment on the sixth, seventh, and twenty-first counts of the plaintiff's amended complaint, on the ground that there is no genuine issue of material fact that the statute of limitations bars the plaintiff's claims, and that the defendant is entitled to judgment as a matter of law.

On May 14, 2013, the plaintiff, Jamie Lee Aponte, filed the twenty-one-count amended complaint in this action against the defendants, Platinum Mortgage, LLC (Platinum), Attorney Richard H. Sheiman (Attorney Sheiman), First Equity Real Estate and Appraisal, LLC (First Equity), HSBC Bank, and Hector L. Colon (Colon).   In the amended complaint, the plaintiff alleges the following facts.   In 2007, the plaintiff was approached, unsolicited, by Beatriz Velez (Velez), an employee, agent, and/or representative of Platinum, with a proposal to build up the plaintiff's credit by purchasing a rental property.   On September 10, 2007, the plaintiff was contacted by Velez, who informed her that it was time to close on the property.   At this point, the plaintiff had not yet:  viewed any properties;  spoken with a real estate broker;  met with or retained an attorney;  signed a purchase contract;  or paid a deposit.   Present at the closing on September 12, 2007 were the plaintiff, Velez, Colon, Attorney Sheiman, and another individual believed to be a Platinum employee.   Platinum served as mortgage broker for the transaction.

At the closing, Attorney Sheiman and Platinum instructed the plaintiff where to sign the closing documents without explaining what the documents were or what information they contained.   At the same time, a Uniform Residential Loan Application (the Application) was prepared by Platinum and submitted to HSBC. The Application was not signed by the plaintiff, contained inflated figures and misrepresentations, and contained a $50,000 “Gift of Equity” listed as an asset of the plaintiff.   Platinum received a $6,000 broker's fee from the transaction.   At the closing, the plaintiff executed a $200,000 Note in favor of HSBC, secured with a mortgage on the property.   The Note was executed by the plaintiff at the direction of Platinum and Attorney Sheiman, with no explanation given as to its terms.   After the closing took place, Velez told the plaintiff that the transaction was only for a short term because Colon needed to transfer the property out of his name.   Velez explained that the plaintiff would not receive the keys to the property, and that Colon would continue to reside in the property, collect rent from tenants, and pay the mortgage on behalf of the plaintiff until the property could be transferred back to Colon.   The plaintiff alleges that Colon was in default of his first mortgage on the property at the date of closing.

The plaintiff further alleges that Attorney Sheiman was the settlement agent on the HUD–1 Settlement Statement (HUD–1), and that he simultaneously represented both the plaintiff and Colon in connection with the purchase of the property.   The plaintiff had never met Attorney Sheiman prior to the closing, did not know who he was at the closing, and did not sign a retainer agreement with Attorney Sheiman to represent her for the purchase of the property.   Attorney Sheiman induced the plaintiff to sign a “conflict letter” regarding his representation of both her and Colon in the transaction, but he failed to inform the plaintiff of the meaning of signing that letter.   Attorney Sheiman prepared and reviewed the HUD–1, in which he included information he knew or should have known was false.   Attorney Sheiman also included a $50,000 Gift of Equity as an amount paid by or on behalf of the borrower and a $50,000 Gift of Equity as a reduction in the amount due to the seller.   Again, Attorney Sheiman merely instructed the plaintiff where to sign with no explanation as to the information contained therein.   Attorney Sheiman, both individually and through R & L Closing Services, LLC (of which he was the owner and sole member), received fees from both the plaintiff and Colon at the closing.

The remainder of the factual allegations are aimed at the other defendants, and the allegations are briefly summarized herein.   The plaintiff alleges that it was a substantially inflated appraisal from First Equity that induced the plaintiff into purchasing the property and obtaining a loan to finance the purchased property that was substantially more than what the property was actually worth.   That loan was provided by HSBC, but HSBC failed to make reasonable inquiries as to the income and asset information included in the Application.   HSBC approved the loan despite the aforementioned documents containing information it knew or should have known was false.   HSBC thus induced the plaintiff to enter into the purchase and loan transactions in the present case, despite the fact that it knew or should have known that the plaintiff had insufficient income to repay the loan.   HSBC then continued to receive mortgage payments from Colon despite knowing that he was not the mortgager, but was in fact the seller.   After the closing, Colon continued to reside on the property, holding himself out as the owner, collecting rent from tenants, and making mortgage payments to HSBC. The plaintiff alleges that Colon is still residing on the property and collecting rent.   Colon also failed to make rent payments to the plaintiff, and he failed to remit to the plaintiff all or part of the rents he collected from the other tenants.   At some point in 2011, Colon stopped making mortgage payments to HSBC, and as a result, the plaintiff's loan is now in foreclosure.

The plaintiff's sixth, seventh, and twenty-first counts of the amended complaint are aimed at the defendant in this matter, Attorney Sheiman.   In count six, the plaintiff alleges a count of fraud against Attorney Sheiman, specifically that his actions and false representations were made as statements of fact for the purpose of inducing the plaintiff to agree to the purchase transaction in which he purportedly represented her.   The plaintiff further alleges that she relied upon and acted on Attorney Sheiman's misrepresentations in agreeing to the transaction.

In count seven, the plaintiff alleges that Attorney Sheiman breached his fiduciary duty to the plaintiff in that he:  (1) knowingly provided false information on the HUD–1;  (2) failed to adequately explain the terms, conditions, and consequences of the purchase transaction for which he was her attorney;  (3) represented both the buyer/plaintiff and the seller/Colon in the purchase transaction;  (4) failed to adequately advise the plaintiff of the consequences of signing the conflict letter;  and (5) participated in a scheme with the other defendants to induce the plaintiff to purchase the property and, in turn, collect money and fees for their roles in the conspiracy.

In count twenty-one, the plaintiff alleges a count of civil conspiracy against Attorney Sheiman, as well as Platinum, First Equity, and Colon.   Count twenty-one alleges that these four defendants collaborated in a scheme to defraud the plaintiff by intentionally misrepresenting and/or concealing the purpose of the sale and including false information on the Application, the HUD–1, and the appraisal, as well as concealing the contents of said documents from the plaintiff so that she would purchase the property and so that the defendants could collect money and fees from the plaintiff for their respective roles in the conspiracy.

On September 5, 2013, Attorney Sheiman filed a motion for summary judgment on the ground that there is no issue of fact that the plaintiff's claims are time barred by the statute of limitations for tort cases, and that he is thus entitled to judgment as a matter of law.

“Summary judgment is a method of resolving litigation when 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 ․ The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried ․ However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury ․ the moving party for summary judgment is held to a strict standard ․ of demonstrating his entitlement to summary judgment.”  (Citation omitted;  internal quotation marks omitted.)  Grenier v. Commissioner of Transportation, 306 Conn. 523, 534–35, 51 A.3d 367 (2012).   “As the party moving for summary judgment, the [movant] is required to support its motion with supporting documentation, including affidavits.”  Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995).  “In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”   (Internal quotation marks omitted.)  Patel v. Flexo Converters U.S.A., Inc., 309 Conn. 52, 57, 68 A.3d 1162 (2013).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ It is not enough ․ for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11, 938 A.2d 576 (2008).

In his motion for summary judgment memorandum, Attorney Sheiman argues that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law on the grounds that the three-year statute of limitations in General Statutes § 52–577 bars the plaintiff's claims in counts six, seven, and twenty-one of the amended complaint.   Given the fact that the closing occurred in 2007 and Attorney Sheiman was not served until 2012, Attorney Sheiman contends that the statute of limitations has run.   Attorney Sheiman further argues that the continuing representation doctrine does not toll the statute of limitations in this case because there has been no material contact between the plaintiff and Attorney Sheiman since the closing, and because the plaintiff has conceded that she was aware that something was wrong immediately after the closing.   The plaintiff counters that counts six, seven, and twenty-one are not barred by § 52–577 because Attorney Sheiman engaged in a continuing course of conduct with the plaintiff.   The plaintiff cites to the conduct alleged in the amended complaint as the initial wrong, and argues that it has alleged that Attorney Sheiman's conduct was in furtherance of a scheme and conspiracy with the other defendants, and that the scheme is still ongoing.   This, as the plaintiff puts it, would toll the three-year statute of limitations.

Section 52–577 provides:  “No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of.”   The plaintiff does not challenge the statute's application to this type of case, but instead argues that the statute of limitations should have been tolled in this case.   It is important to note that the tolling doctrines discussed in the parties' briefs, the continuing representation doctrine and the continuing course of conduct doctrine, are different doctrines and require distinct showings to be made.   For the purposes of this memorandum, the court will consider whether there is an issue of material fact with respect to each doctrine.

A. Continuing Representation

“[A] plaintiff may invoke the [continuous representation] doctrine, and thus toll the statute of limitations, when the plaintiff can show:  (1) that the defendant continued to represent him with regard to the same underlying matter;  and (2) either that the plaintiff did not know of the alleged malpractice or that the attorney could still mitigate the harm allegedly caused by that malpractice during the continued representation period.”  (Emphasis in original;  internal quotation marks omitted.)  Lee v. Brenner, Saltzman & Wallman, LLP, 128 Conn.App. 250, 255, 15 A.3d 1215, cert. denied, 301 Conn. 926, 22 A.3d 1277 (2011).   As to the first prong of the continuing representation test, “[t]he formal termination of the [attorney-client] relationship occurs when ․ the matter for which the attorney was hired comes to a conclusion ․” DeLeo v. Nusbaum, 263 Conn. 588, 597, 821 A.2d 744 (2003).

The continuing representation doctrine does not apply to this case because there is no issue of material fact as to either prong of the test.   The plaintiff conceded in interrogatory response 9 that she has not had any material contact with Attorney Sheiman since the closing on September 12, 2007, and all of the allegations against Attorney Sheiman relate to his actions at the closing.   As a result, there is no issue of material fact that Attorney Sheiman continued to represent the plaintiff in the underlying matter beyond the closing.   The plaintiff has also failed to show an issue of material fact as to the second prong of the test.   The plaintiff admitted that she knew something was wrong immediately after the closing, a full five years prior to filing suit.   Because the plaintiff has failed to demonstrate a genuine issue of material fact as to continuance of the representation and as to her own knowledge that something was wrong immediately after the closing, the continuing representation doctrine does not apply to this case and cannot toll the statute of limitations.

B. Continuing Course of Conduct

In her objection to Attorney Sheiman's motion for summary judgment, the plaintiff argues for the tolling of the statute of limitations under the continuing course of conduct doctrine.   The Appellate Court has held that, “[w]hen the wrong sued upon consists of a continuing course of conduct, the statute does not begin to run until that course of conduct is completed ․ [I]n order [t]o support a finding of a continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto.   That duty must not have terminated prior to commencement of the period allowed for bringing an action for such wrong ․ Where [our Supreme Court has] upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act ․ Thus, there must be a determination that a duty existed and then a subsequent determination of whether that duty is continuing.”  (Internal quotation marks omitted.)   Lee v. Brenner, Saltzman & Wallman, LLP, supra, 128 Conn.App. 257.

“There is no tolling of statutes of limitation in either tort or contract actions for the failure of an attorney to tell a client that a document drafted by the attorney could be inaccurate because, once the representation of the client is complete and the document executed, any warning would be ineffective ․ The doctrine of continuing course of conduct as used to toll a statute of limitations is better suited to claims where the situation keeps evolving after the act complained of is complete, such as medical malpractice, rather than one where the situation cannot change, such as legal malpractice arising from negligent drafting of the written word.”  (Internal quotation marks omitted.)  Id., 257–78.   The plaintiff also rightly points out that “a precondition for the operation of the continuing course of conduct doctrine is that the defendant must have committed an initial wrong upon the plaintiff ․ Second, there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto.”  (Internal quotation marks omitted.)  Rosenfield v. Rogin, Nassau, Caplan, Lassman & Hirtle, LLC, 69 Conn.App. 151, 161, 795 A.2d 572 (2002).

The plaintiff alleges that Attorney Sheiman committed the initial wrongs of providing false information on the HUD–1, failing to adequately explain the terms and conditions of the purchase transaction to the plaintiff, representing both the plaintiff/buyer and the seller in the purchase transaction, failing to adequately advise the plaintiff of the consequences of signing the conflict letter, and participating in a scheme with the other defendants to defraud the plaintiff.   It should be noted that Attorney Sheiman denies these allegations.   As to the requirement of a breach of duty that remained in existence after commission of the initial wrong, the plaintiff merely alleges that Attorney Sheiman acted in furtherance of a scheme and conspiracy with the other defendants and that the scheme is still ongoing.   These unadmitted allegations, coupled with no evidentiary support, cannot be the basis for establishing that there is a genuine issue of material fact.   As the Appellate Court noted in Karwowski v. Fardy, 118 Conn.App. 480, 485, 984 A.2d 776 (2009), “unadmitted allegations in the pleadings do not constitute proof of the existence of a genuine issue as to any material fact.”  (Internal quotation marks omitted.)   Without evidence that there has been a breach of a duty on the part of Attorney Sheiman since the original wrong, there is no genuine issue of material fact that Attorney Sheiman engaged in wrongdoing that would toll the statute of limitations under the continuing course of conduct doctrine.

In the present case, the plaintiff has failed to present evidence in the form of affidavits or otherwise that would suggest that there is a genuine issue of material fact as to either the application of the continuing representation doctrine or the continuing course of conduct doctrine.   Because it cannot be tolled, the three-year statute of limitations in § 52–577 applies as written.   Having brought suit more than five years after the date of the closing and more than two years after the statute of limitations was up, the plaintiff's claims are time barred.

Accordingly, the motion for summary judgment is granted as to counts six, seven and twenty-one of the plaintiff's amended complaint.

GILARDI, J.T.R.

Gilardi, Richard P., J.T.R.