Opinion
Nos. CV 09-6006561-S, CV 09-6006562-S
August 6, 2010
MEMORANDUM OF DECISION ON APPLICATIONS TO DISCHARGE NOTICE OF LIS PENDENS
The plaintiffs in the above-captioned cases filed applications to discharge a notice of lis pendens. Both applications involve essentially the same facts and the same claims of law. Accordingly, this memorandum should be filed in each case.
The court conducted a hearing on the applications on April 28, 2010, and the parties subsequently filed post-trial briefs. Findings made herein are based upon the testimony and exhibits presented at the hearing.
The plaintiffs seek to discharge a notice of lis pendens recorded in the Hartford land records on July 12, 2005 in Volume 5374 at Page 321. The defendant here, Alyssa Peterson, filed the subject lis pendens in a separate case in which she was the plaintiff, entitled Peterson v. Woldeyohannes, Superior Court, judicial district of Hartford, Docket No. CV 04 0834966, return date of July 6, 2004, hereinafter referred to as the underlying case. A to Zee, LLC and Hannah Woldeyohannes were named as original defendants in that case. The subject lis pendens states that the action was "brought seeking the imposition of a constructive trust and other remedies in connection with certain real property known as the Laurelhart Condominiums, 230-232 Farmington Avenue, [unit numbers] B-2, E-3, G-4, C-9, D-6 and E-7, Hartford, Connecticut." The notice further states that the defendant A to Zee, LLC is the record owner of those units and that each of the units is affected by the underlying action. (Emphasis added.) On September 21, 2005, the underlying case was withdrawn as to A to Zee, LLC. On or about January 18, 2007, the plaintiff, Lorraine Caldwell, purchased unit C-9 from A to Zee, LLC; and on or about December 28, 2006, the plaintiffs, Julian M. Allen and Nydia Allen, purchased unit G-4 from A to Zee, LLC.
The plaintiffs claim that the notice of lis pendens, which describes their units, should be discharged for the following reasons: 1) notice of the lis pendens was not properly served upon the owner pursuant to General Statutes § 52-325(c); 2) the claims for relief in the underlying action do not affect real property, as required by § 52-325 and 3) the underlying action was withdrawn as to A to Zee, LLC prior to the conveyances to the plaintiffs in the present case.
The court notes that these actions were brought pursuant to General Statutes § 52-325a, which allows the court to hold a hearing to determine whether a notice of lis should be discharged. General Statutes § 52-325b authorizes the discharge of a lis pendens where the plaintiff that filed the lis pendens, here, the defendant Alyssa Peterson, has not demonstrated probable cause to sustain the validity of her claim. The grounds for discharge advanced by the plaintiffs in this case are also contained in General Statutes § 52-325d, which allows an interested party to request a discharge of an invalid notice of lis pendens. The court will, therefore, analyze the plaintiffs' claims with an understanding that a finding of invalidity as to the lis pendens equates to a finding that Alyssa Peterson has not established probable cause to sustain the validity of her claims as it relates to the lis pendens.
It is further noted that the decision of this court in the underlying case, Peterson v. Woldeyohannes, Superior Court, judicial district of Hartford, Docket No. CV 04 0834966 (Domnnarski, J., November 13, 2009), mentioned below, is on appeal. The defendant maintains that this action is subject to a stay of execution under Practice Book § 61-11 because it seeks to affect the lis pendens filed in the underlying action. The court does not agree. This is not a proceeding to enforce or carry out the judgment in the underlying case, which is stayed under Practice Book § 61-11.
I. SUFFICIENCY OF SERVICE
Section 52-325(c) states that a notice of lis pendens must be served by a "proper officer or indifferent person" upon the subject property owner within thirty days of the recording of such notice. In this case, a notice of lis pendens has never been served upon the subject property owner, A to Zee, LLC, by a proper officer or indifferent person. Although the defendant does not dispute this fact, she maintains that there was sufficient service of the notice of lis pendens upon A to Zee, LLC. The defendant, and her attorney at the time, Alena Gfeller, both testified that a copy of the notice of lis pendens was delivered to Hume and Associates, LLC, the attorney of record for A to Zee, LLC, on or about July 13, 2005. The plaintiffs did not present any testimony or evidence to show that the notice of lis pendens was not received by Hume and Associates, LLC.
The court agrees with the plaintiffs that there has not been compliance with the service requirements of § 52-325. Nevertheless, the court finds that this lack of compliance does not invalidate the lis pendens because A to Zee, LLC, the record owner, received a copy of the notice within thirty days of its filing. The court is guided by the case of Manaker v. Manaker, 11 Conn.App. 653, 661, 528 A.2d 1170 (1987), wherein the Appellate Court found that it was error to discharge a lis pendens on the ground that it was improperly served, even though the defendant had actually received a copy. The court observed: "Since a lis pendens under § 52-325 is a creature of statute, the party who invokes its provisions must comply with statutory requirements . . . Nevertheless, the provisions of the statute should be liberally construed to implement reasonably and fairly its remedial intent of giving notice of claims pertaining to the real property which is the subject of the litigation . . .
"In construing a statute, [w]e need hardly say here that [i]t is ancient [and yet enduring] wisdom that statutes should be interpreted so as to effectuate their manifested purpose or object . . . The obvious purpose of furnishing a copy of the notice of lis pendens upon the owner is to give him actual notice that one has been filed." (Citations omitted; internal quotation marks omitted.) Id., 660-61. This purpose was satisfied in the underlying case because A to Zee, LLC had actual notice that a lis pendens had been filed. Therefore, the court declines to discharge the notice of lis pendens for insufficient service.
II. CLAIMS MADE IN THE UNDERLYING ACTION
The court now addresses the plaintiffs' argument that the lis pendens should be discharged because the defendant's claims in the underlying case were not within the definition of those for which a lis pendens may be filed in accordance with § 52-325. Pursuant to that statute, a party to an action may place a notice of lis pendens on the land records only when "the action is intended to affect real property." Otherwise, the notice of lis pendens is not valid. The issue, here, therefore, is whether the claims in the underlying case were "intended to affect real property."
The underlying case has had a long history and the essential facts of the case were recited in Peterson v. Woldeyohannes, 111 Conn.App. 784, 961 A.2d 475 (2008). "The plaintiff's complaint alleged that in February 2004, she and the defendant, social acquaintances, entered into an oral agreement to form a partnership for the purpose of purchasing six condominium units in Hartford. The alleged partnership engaged the services of an attorney to negotiate the purchase and to draw up a purchase agreement for the units. Before the partnership had the opportunity to enter into an agreement with the sellers, however, the units were conveyed to A to Zee, LLC. The defendant is the sole owner of A to Zee, LLC. The plaintiff thereafter filed a ten-count complaint alleging the creation of an oral partnership between herself and the defendant, and seeking recovery based on a number of theories. In particular, the complaint alleged that the defendant breached the partnership agreement and breached her fiduciary duty to the plaintiff and the partnership by usurping the opportunity to purchase the units." Id., 785-86.
The Appellate Court remanded Peterson v. Woldeyohannes for a new hearing in damages, which was conducted by this court. See Peterson v. Woldeyohannes, supra, Superior Court, Docket No. CV 04 0834966.
The plaintiffs argue that the underlying action was not intended to affect real property. For support, they point out that the operative complaint in the underlying action, dated September 16, 2005, was comprised of the following enumerated counts: declaratory judgment, breach of oral agreement, breach of fiduciary duty, interference with a business relationship, constructive trust, unjust enrichment, good faith/fair dealing, fraud, alter ego, and conversion/civil theft. Moreover, they stress that the underlying case was not intended to affect real property because in her claims for relief, Alyssa Peterson sought a declaratory judgment as to the enforceability of the partnership, a declaratory judgment as to the rights of the respective partners of the partnership, and money damages. It is noted that the original complaint, and the September 16, 2005 complaint, contained allegations against the original defendant, and record owner of the real estate, A to Zee, LLC.
Section 51-325(b) provides in relevant part that "`intended to affect real property' means (1) actions whose object and purpose is to determine the title or rights of the parties in, to, under or over some particular real property; (2) actions whose object and purpose is to establish or enforce previously acquired interests in real property; [or] (3) actions which may affect in any manner the title to or interest in real property . . ." At bottom, the underlying case involved a dispute between two parties, Alyssa Peterson and Hannah Woldeyohannes, as to whether a partnership existed and the legal consequences of their conduct. The real estate that the alleged partnership was to purchase was ultimately acquired by A to Zee, LLC. In fact, it must be emphasized that neither Alyssa Peterson nor Hannah Woldeyohannes were ever record owners of the real estate in question. Thus, Alyssa Peterson's interest was never in the real property, but in the alleged partnership itself.
The issues presented in the underlying case are similar to those found in Wheeler v. Polasek, 21 Conn.App. 32, 571 A.2d 129 (1990). In Wheeler, a general partner in a limited partnership filed a notice of lis pendens against the partnership's real property in connection with an action for, in part, breach of fiduciary duty. The trial court discharged the lis pendens. The discharge was upheld by the Appellate Court on the grounds that partnership realty is considered personalty, with respect to any individual partners rights therein. Id., 33. "Section 52-325(b) specifies that in order for an action to affect real property, its purpose or outcome must determine the rights of the parties in or to the particular real property, or it must establish or enforce previously acquired interests in it. The claims set forth in the plaintiff's complaint are claims against the partnership itself . . . Although the plaintiff claims that he has a realty interest in the partnership's property and a consequent right to secure that interest with a notice of lis pendens, his claim must fail . . . [P]artnership interest is personal property . . . It is axiomatic, therefore, that none of the plaintiff's claims affects the real property of the partnership within the meaning of § 52-325." Id., 33-34.
As further support, the court notes that ownership interest in a limited liability company, such as the previous defendant A to Zee, LLC, is similarly treated. For instance, General Statutes § 34-167(a) provides that "[p]roperty transferred to . . . a limited liability company is property of the limited liability company and not of the members individually. A member has no interest in specified limited liability company property." Moreover, General Statutes § 34-169 provides: "A limited liability company membership interest is personal property." Thus, because the claims in the underlying case were based on the defendant's personalty interest, they did not affect real property. As the Wheeler court noted: "The plaintiff's interest as a partner in this limited partnership is a personalty interest; the suit does not affect real property within the meaning of § 52-325." Wheeler v. Polasek, supra, 21 Conn.App. 34. See also Gattoni v. Zaccaro, Superior Court, judicial district of New Haven, Docket No. CV 97 0396081 (March 13, 1997, Hodgson, J.) (allegations that a defendant was holding plaintiff's interest in a limited liability company in constructive trust as partner in that entity not deemed to be interest in real property).
The court also notes that following the hearing in damages in the underlying case, the plaintiff was awarded monetary damages against the sole remaining defendant, Hannah Woldeyohannes. See Peterson v. Woldeyohannes, supra, Superior Court, Docket No. CV 04 0834966. Admittedly, the court did enjoin Hannah Woldeyohannes from transferring her interest in A to Zee, LLC, as well as not taking steps to have A to Zee, LLC transfer its interest. However, this is consistent with the fact that Woldeyohannes was the sole member of the limited liability company, and the court had jurisdiction over her and her property interests. No judgment entered against the record title owner A to Zee, LLC because the court did not have jurisdiction over A to Zee, LLC directly since it was no longer a party, as is further discussed below. See, e.g., Leonard v. Natera, Superior Court, judicial district of Fairfield, Docket No. CV 08 5017718 (November 12, 2008, Bellis, J.) (plaintiff not entitled to a remedy that affected property at issue because record title owner was not a party to the action).
This court awarded the defendant, inter alia, the share of profits that she would have been entitled to receive under the partnership agreement. Peterson v. Woldeyohannes, supra, Superior Court, Docket No. CV 04 0834966. General Statutes § 34-347 clarifies that a partner's share of the profits and losses of the partnership and the partner's right to receive distributions is personal property.
The court finds that the defendant's claims in the underlying case did not affect real property within the meaning of § 52-325. Consequently the lis pendens is invalid. This conclusion requires a finding, therefore, that there is not probable cause to sustain the validity of the defendant's claims against A to Zee, LLC in the underlying case.
III. WITHDRAWAL OF ACTION AGAINST A to Zee, LLC
The court finds that the defendant withdrew her complaint in the underlying case against A to Zee, LLC on September 21, 2005. See plaintiffs' Exhibit 2. On January 22, 2007, A to Zee, LLC, acting by Woldeyohannes as manager, subsequently recorded a copy of the withdrawal, together with an affidavit of facts, pursuant to General Statutes § 47-12a, on the Hartford land records. See plaintiffs' Exhibit 7. In the affidavit, Woldeyohannes attested to the fact that the underlying action had been withdrawn as to A to Zee, LLC. The warranty deeds from A to Zee, LLC for the plaintiffs' units were recorded after this affidavit was recorded. The defendant never reinstituted a claim against A to Zee, LLC.
Section 47-12a(a) provides in relevant part: "An affidavit, which states facts . . . and which may affect the title to or any interest in real estate in this state, and which is made by any person having knowledge of the facts or competent to testify concerning them in open court, may be recorded in the land records of the town in which the real estate is situated . . ."
The plaintiffs argue that the subject lis pendens is no longer valid because the complaint against A to Zee, LLC was withdrawn prior to the conveyance of units C-9 and G-4. The effect of a withdrawal of an action upon a lis pendens was discussed in H.G. Bass Associates, Inc., v. Ethan Allen, Inc., 26 Conn.App. 426, 601 A.2d 1040 (1992). In that case, the plaintiff filed two actions to foreclose the same mechanic's lien, and, thereafter, withdrew the second action. The notice of the lis pendens filed in connection with the first foreclosure action was filed more than one year from the date that the mechanic's lien was recorded. Id., 428. As a result, the court found that the mechanic's lien no longer existed. Moreover, the court held that the plaintiff could not rely on the other notice of lis pendens filed in connection with the second action. Id., 430. The court noted: "The notice of lis pendens filed with the second action to foreclose the mechanic's lien, although filed within the one year time period, is ineffective because the . . . withdrawal of the underlying action on February 24, 1987, released the lis pendens . . . The plaintiff's withdrawal of the action in February 1987, effectively erased the [court's] slate clean as though the action had never been commenced, thereby eliminating the corresponding lis pendens." (Citations omitted; emphasis added.) Id., 430-31. Similarly, here, the withdrawal of action against the property owner, A to Zee, LLC, effectively released and eliminated the lis pendens.
The court's conclusion that the withdrawal of an action has an adverse effect upon a lis pendens is supported by General Statutes § 52-326, which applies the provisions of General Statutes § 52-324 to a notice of lis pendens. Under § 52-324, an interested person may obtain a certificate from the clerk of court attesting to the fact that the plaintiff has withdrawn the suit. That certificate may be subsequently filed upon the land records. Such certificate provides notice that the lis pendens no longer affects title to the subject property.
Accordingly, because the underlying action against the property owner, A to Zee, LLC, was withdrawn, the lis pendens is invalid and of no effect. Thus, the defendant has not, and cannot, establish probable cause to sustain any claim against A to Zee, LLC, in the underlying action.
CONCLUSION
For the foregoing reasons, the court will order the subject notice of lis pendens discharged of record pursuant to § 52-325b(b)(2)(A). The order in each case is attached hereto. Parties are reminded that any appeal of this order is governed by General Statutes § 52-325c, which contains a seven-day appeal period.