Opinion
CV106002884S
04-20-2016
Milone & Macbroom, Inc. v. Winchester Estates, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE THE DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT (#154, 217 & 219)
John W. Pickard, J.
The moving defendants have filed motions for summary judgment arguing that there are no genuine issues of material fact and they are entitled to judgment as a matter of law because the mechanic's lien recorded by the plaintiff is invalid. The plaintiff opposes summary judgment arguing that there are genuine issues of material fact concerning whether the mechanic's lien is valid. For the reasons stated below, the court grants the moving defendants' motion for summary judgment.
PROCEDURAL HISTORY
On August 3, 2010, the plaintiff, Milone & Macbroom, Inc., filed a complaint against the defendants, Winchester Estates, LLC (Winchester Estates), Anthony Silano, Silano Investment Corporation, Tissa Funding Corporation (Tissa), Capital Source Finance, LLC (Capital Source), Southern Connecticut Financial Services, Inc. (Southern Connecticut Financial), and Pension Services, LLC (Pension Services), seeking foreclosure of a mechanic's lien on property the plaintiff alleges is owned by Winchester Estates for materials furnished and services performed in relation to the property by agreement with Winchester Estates, Silano, and Silano Investment Corporation. The plaintiff further alleges that the remaining defendants hold encumbrances on the property that are subsequent in right to the plaintiff's mechanic's lien. On April 28, 2014, the plaintiff filed an amended complaint (#160).
Winchester Estates, Silano, and Silano Investment Corporation have not moved for summary judgment.
On June 5, 2014, Tissa and Capital Source filed an answer to the plaintiff's amended complaint (#170). On June 20, 2014, Pension Services filed an answer to the plaintiff's amended complaint (#176). On July 11, 2014, Southern Connecticut filed an answer and special defenses to the plaintiff's amended complaint (#179).
On April 24, 2014, Tissa filed a motion for summary judgment (#154) and on April 25, 2014, it filed a revised memorandum in support of its motion (#157) and supporting exhibits. On April 23, 2015, Southern Connecticut filed a motion for summary judgment with supporting exhibits (#217) and a memorandum in support of its motion (#218). On April 28, 2015, Pension Services filed a motion for summary judgment (#219), which included a memorandum of law and supporting exhibits. Each of the moving defendants argues that there are no genuine issues of material fact and they are entitled to judgment as a matter of law because the plaintiff's alleged mechanic's lien is invalid because Winchester Estates was not the owner or holder of an equitable interest in the property at the time that the plaintiff commenced its work and the owner did not consent to the property being subject to a mechanic's lien.
Tissa did not file a new motion after the plaintiff's revised complaint, electing to rely upon its existing motion.
On June 11, 2015, the plaintiff filed a memorandum in opposition to Southern Financial's motion for summary judgment (#222), a memorandum in opposition to Tissa's motion for summary judgment (#223), and a memorandum in opposition to Pension Services' motion for summary judgment (#224). The plaintiff included supporting exhibits with each memorandum. On July 2, 2015, Tissa filed a memorandum in reply to the plaintiff's opposition memorandum (#228). On the same day, Southern Connecticut filed a memorandum in reply to the plaintiff's opposition memorandum (#229). On July 6, 2015, Pension Services filed a memorandum in reply to the plaintiff's opposition memorandum (#230).
The matter was heard by the court at short calendar on December 7, 2015. At short calendar, the court granted the parties permission to file supplemental memoranda and ordered that all memoranda be filed by January 4, 2016. On December 18, 2015, the plaintiff filed a supplemental memorandum (#248) with supporting exhibits. On December 30, 2015, Southern Connecticut filed a supplemental memorandum (#249) with supporting exhibits and Pension Services filed a supplemental memorandum (#250) with supporting exhibits. On January 4, 2016, Tissa filed a supplemental memorandum (#251) with supporting exhibits.
DISCUSSION
" Summary judgment shall be rendered forthwith if the pleadings, affidavits and 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 . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Citation omitted; internal quotation marks omitted.) Vendrella v. Astriab Family Ltd. Partnership, 311 Conn. 301, 313, 87 A.3d 546 (2014).
" [T]he genuine issue aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
" 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 . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Romprey v. Safeco Ins. Co. of America, 310 Conn. 304, 319-20, 77 A.3d 726 (2013). " It is not enough, however, 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, 11, 938 A.2d 576 (2008).
In the present case, the moving defendants argue that they are entitled to summary judgment because there are no genuine issues of material fact and, as a matter of law, the plaintiff does not have a valid mechanic's lien because at the time that the plaintiff commenced work related to the subject property it did not have the consent of the owner of the property or someone with a sufficient equitable interest in the property. Specifically, they argue that on August 3, 2005, the date listed on the mechanic's lien as the date when the plaintiff commenced work related to the property, the current owner of the property, Winchester Estates, could not have consented to the work because it did not become a legal entity until November 15, 2005, and did not obtain title to the property until November 28, 2005. They argue that the owner of the property on August 3, 2005, Robert Persol, did not consent to a mechanic's lien, as evidenced by a specific disclaimer of any mechanic's lien in the sale agreement between Persol and Aurora Rosa, entered into on October 6, 2004. They further argue that Rosa could not consent to a mechanic's lien because the sale agreement between Persol and Rosa did not create an equitable interest in the property sufficient to allow Rosa to consent to a mechanic's lien. In addition, they argue that even assuming, arguendo, that Rosa had an equitable interest in the property she was not the one who contracted with the plaintiff to provide work related to the property and her interest does not transfer to Winchester Estates. Finally, the moving defendants argue that the court may not reform the mechanic's lien to change the start date of the work until after Winchester Estates acquired title to the property because, while a court may correct a clerical error to validate a mechanic's lien it may not substantively reform the lien for the purpose of making an otherwise invalid lien valid.
The court notes that the plaintiff alleges that it actually commenced work on the subject property on August 16, 2004, close to a year earlier than the date recorded in the mechanic's lien and also prior to the date of the sale agreement between Robert Persol and Aurora Rosa. Any arguments that the plaintiff advances to support the validity of its mechanic's lien are not strengthened by use of the earlier date. Therefore, the court will confine its analysis to the date actually recorded on the mechanic's lien as the commencement date for work performed by the plaintiff.
The plaintiff argues that at the time it commenced work related to the subject property it had the consent of Rosa, who held an equitable interest in the property and assigned her interest to the Winchester Estates, who subsequently purchased the property. Specifically, it argues that Rosa had an equitable interest in the property because the sale agreement between Rosa and Persol included a cash advance from Rosa to Persol and also required Rosa to acquire surveying work and town permits prior to completion of the sale. The plaintiff argues that Rosa's consent is sufficient as it relates to Winchester Estates because she assigned her interest in the property to Winchester Estates, who subsequently purchased the property under the terms of the sale agreement. The plaintiff further argues that the mechanic's lien is valid because there was no prejudice to the subsequent encumbrance holders since they were actively involved in the development of the property and, therefore, had notice of the work that gave rise to the mechanic's lien. Finally, the plaintiff argues that, if the court finds that the mechanic's lien would be invalid because there was not consent on August 3, 2005, then the court may amend the mechanic's lien to change the date of the commencement of work to a date after Winchester Estates acquired title to the property.
The plaintiff also made arguments and submitted evidence relating the development and acquisition of a second parcel of land by a separate legal entity, Winchester Highland Ridge Estates, LLC, that was to be developed in conjunction with the subject property. The court finds that any factual disputes related to this second parcel of land are not material to the issue of whether the plaintiff had the consent of the owner or a party with a sufficient equitable interest in the subject property on the date it commenced work. Therefore, the court will not address any factual disputes related to the second property.
" In this state, a 'mechanic's lien is a creature of statute and gives a right of action which did not exist at common law . . . The purpose of the mechanic's lien is to give one who furnishes materials or services the security of the building and land for the payment of his claim by making such claim a lien thereon . . . Moreover, [t]he guidelines for interpreting mechanic's lien legislation are . . . well established. Although the mechanic's lien statute creates a statutory right in derogation of the common law . . . its provisions should be liberally construed in order to implement its remedial purpose of furnishing security for one who provides services or materials . . . Our interpretation, however, may not depart from reasonable compliance with the specific terms of the statute under the guise of a liberal construction.' . . . F.B. Mattson Co. v. Tarte, 247 Conn. 234, 237, 719 A.2d 1158 (1998)." Intercity Development, LLC v. Andrade, 286 Conn. 177, 183-84, 942 A.2d 1028 (2008).
General Statutes § 49-33(a) provides: " If any person has a claim for more than ten dollars for materials furnished or services rendered in the construction, raising, removal or repairs of any building or any of its appurtenances or in the improvement of any lot or in the site development or subdivision of any plot of land, and the claim is by virtue of an agreement with or by consent of the owner of the land upon which the building is being erected or has been erected or has been moved, or by consent of the owner of the lot being improved or by consent of the owner of the plot of land being improved or subdivided, or of some person having authority from or rightfully acting for the owner in procuring the labor or materials, the building, with the land on which it stands or the lot or in the event that the materials were furnished or services were rendered in the site development or subdivision of any plot of land, then the plot of land, is subject to the payment of the claim."
" Our cases clearly state that a [mechanic's] lien is invalid unless the party requesting the work is the owner of the property or has an equitable interest in that property." New England Savings Bank v. Meadow Lakes Realty Co., 243 Conn. 601, 617, 706 A.2d 465 (1998). " [Our Supreme Court] has stated that '[l]ienors are protected if they have a claim either (1) by virtue of an agreement with or the consent of the owner of the land, or (2) by the consent of some person having authority from or rightfully acting for such owner in procuring labor or materials.' Seaman v. Climate Control Corp., 181 Conn. 592, 595, 436 A.2d 271 (1980). 'The mere granting of permission for work to be conducted on one's property has never been deemed sufficient to support a mechanic's lien against the property . . . [Our Supreme Court has] also recognized long ago that a landowner does not subject his property to a mechanic's lien by simply allowing work to be done to it.' . . . Hall v. Peacock Fixture & Electrical Co., 193 Conn. 290, 295, 475 A.2d 1100 (1984)." (Footnote omitted.) Id., 618.
" As a general rule, a lien on after-acquired property is, therefore, invalid. Centerbrook, Architects & Planners v. Laurel Nursing Services, Inc., [224 Conn. 580, 583-84, 620 A.2d 127 (1993)]. Certain equitable interests arising out of a contract for sale of land may, however, support a mechanic's lien on after acquired property. See, e.g. Hannan v. Handy, 104 Conn. 653, 658, 134 A. 71 (1926) (equitable interest sufficient to give rise to mechanic's lien may arise when contract for sale provides title will not pass until completion of building on vendor's land); Hillhouse v. Pratt, 74 Conn. 113, 117, 49 A. 905 (1901) (contract for sale of land requiring vendee to commence construction of house prior to passage of title creates sufficient equitable interest in vendee to permit mechanic's lien on property)." Id., 618-19.
" [I]n order for the buyer under a contract of purchase of real estate to have a sufficient equitable interest in the property to support a mechanic's lien in favor of the buyer's supplier of materials [or services], the provision in the contract providing for the work on the property must be in some sense for the interest or at the behest of the seller of the property. The provision must require, as a condition of the seller's obligation under the contract, that the buyer perform the work at issue. The rationale underlying this principle is that the buyer under those circumstances is improving the land, not only for the buyer's own benefit, but also for the benefit of the record owner. That rationale is what supports the conclusion that the seller has transferred to the buyer, before the buyer takes title to the property, an equitable interest in the property sufficient to support a mechanic's lien in favor of the buyer's supplier of materials [or services], that attaches to the estate of the buyer after the buyer takes title thereto." (Footnote omitted.) Centerbrook, Architects & Planners v. Laurel Nursing Services, Inc., supra, 224 Conn. 588-89.
" [A]n option contract does not, by itself, create an obligation in the buyer to perform services upon the property as a condition of sale. It merely binds the vendor to keep his or her offer open for a stated time in exchange for certain consideration. Patterson v. Farmington Street Railway Co., 76 Conn. 628, 642, 57 A. 853 (1904) (option contract concerns sale of power to withdraw offer but does not affect other 'incidents to absolute ownership')." New England Savings Bank v. Meadow Lakes Realty Co., supra, 243 Conn. 617 n.17.
" [Our Supreme Court has] in the past 'acknowledge[d] the realties of the manner in which the construction work operates' in interpreting § 49-33. Thompson & Peck, Inc. v. Division Drywall, Inc., [241 Conn. 370, 381, 696 A.2d 326 (1997)]. Although we recognize that practical considerations inherent in real estate development may necessitate commencing surveying and engineering services prior to the acquisition of the property, we cannot presume from the sparse legislative history that the amendment [including such services within the scope of work eligible for a mechanic's lien] abrogated the longstanding requirement that the contracting property owner hold title to or have an equitable interest in the land at the time that the work commenced." Id., 621-22. " [T]herefore . . . our decision in Centerbrook, Architects & Planners applies to 'the site development or subdivision of [a] plot of land . . .' General Statutes § 49-33(a)." Id., 622.
In Centerbrook, Architects & Planners, our Supreme Court held that a contract that conditioned the buyer's duty to purchase the property on its ability to acquire zoning permits for its intended use of the property did not create an equitable interest sufficient to subject the property to a mechanic's lien because the zoning permit was for the benefit of the buyer and not the seller and the seller's permission for the buyer to contract with the plaintiff for work related to the property did not constitute consent to subject the property to a mechanic's lien. Centerbrook, Architects & Planners v. Laurel Nursing Services, Inc., supra, 224 Conn. 580. The court noted that " if the permits had not been secured, it would have been [the buyer], and not [the seller], that would have had the choice of either waiving the condition and closing on the property or terminating the contract." Id., 589-90. In New England Savings Bank, the court noted that the trial court found that the seller " did not consent to the work that was performed" and " [e]ven if [the seller] had given permission for [the lienholder] to begin work or was simply aware of and acquiesced to it, this would not constitute sufficient consent to support the lien." New England Savings Bank v. Meadow Lakes Realty Co., supra, 243 Conn. 622. The court went on to note that " [s]ignificantly, the trial court made no finding that there had been a contract for sale, similar to those in Hillhouse v. Pratt, [74 Conn. 13, 114, 49 A. 905 (1901), or Seipold v. Gibbud, [110 Conn. 392, 393, 148 A. 328 (1930)], between [the buyer] and [the seller] requiring [the buyer] to survey or subdivide the property prior to the transfer of title and [the lienholder] does not argue that such a contract existed. It is, therefore, clear that [the lienholder's] claim for a lien for services performed on after-acquired property is improper and that, consequently, the lien is invalid." Id., 622-23. Both Hillhouse and Seipold involved sale agreements that required the buyer to commence work on the land prior to the passage of title.
In the present case, the plaintiff argues that at the time that it commenced work on the subject property Rosa had an equitable interest in the property sufficient to allow her to consent to the work being performed as a result of the sale agreement between Persol and Rosa. The plaintiff specifically points to the sections of the agreement concerning closing and a mortgage granted by Rosa to Persol for a property located in Maine.
Looking first to the provision governing closing, it states " The closing and transfer of title shall occur within 30 days of the Buyer's successful completion of the development process, but in no event later than 24 months from the date of the contract." The closing section goes on to state " The Buyer will have an initial period of 1 year from the date of this contract to secure any approvals which it deems necessary for the development of the Premises. The consideration for this contingency period shall be the payment of $2,000 per month commencing on the contract date and continuing monthly thereafter for the 12 month period." (Emphasis added.) The language of this section indicates that any approvals are for the benefit of the buyer and not the seller. This conclusion is bolstered by the fact that the parties agreed that " Buyer shall have the right to withdraw from the contract during the approval period upon 30 days advance notice to the Seller." The right to withdraw is not limited to certain conditions. Read together, the two sections give the buyer an option to purchase the property if the buyer secures approvals that she deems necessary in exchange for payment of a monthly fee to the seller to secure the option. The approvals clearly would be for the benefit of the buyer and not the seller as the buyer is the party interested in developing the property and has discretion as to what approvals are necessary to go forward with the sale. Such an option contract is not sufficient to create an equitable interest in the subject property giving rise to a mechanic's lien.
Looking next to the language concerning a mortgage granted by Rosa to Persol for the purchase of property in Maine, " The additional consideration for this transfer shall be a mortgage loan of $350,000 by Buyer to Seller to facilitate the purchase of a farm . . . in Troy, Maine . . . The mortgage loan will be secured by a first mortgage on the property in Maine and a second mortgage on the Premises. The mortgage loan will be repayable with 5% interest from the date the loan is granted as a full credit against the sales price of the Premises at closing, subjection to the terms in paragraph 13, Withdrawal. Upon closing the Premises Mortgage and Maine Mortgage shall be released by the buyer." Paragraph 13 provides in relevant part " If Buyer elects to withdraw then Seller shall repay the $350,000 loan from Buyer within 18 months from the date of withdrawal and the 5% interest on the loan shall be calculated from the date of Buyer's withdrawal to the date of repayment, all as proved in the Note attached hereto as Schedule B." While the mortgage on the subject property would function as an advance of the purchase price if Rosa exercised her option to purchase the property, if she elected to withdraw Persol was still obligated to repay the mortgage loan. Insofar as the mortgage loan would function as a reduction in the amount due at closing it was related to the sale of the property. It did not, however, create an equitable interest that would allow Rosa to consent to work giving rise to a mechanic's lien.
The court finds that nothing in the agreement constitutes consent by Persol for the property to be subject to a mechanic's lien nor does any language in the agreement give Rosa an equitable interest sufficient to allow her to subject the property to a mechanic's lien. Therefore, the court finds that on August 3, 2005, the plaintiff did not have the consent of the owner of the subject property, Persol, or anyone with a sufficient equitable interest in the subject property to consent to work giving rise to a mechanic's lien. Having found that Rosa did not have a sufficient equitable interest to consent to work giving rise to the mechanic's lien, the court does not need to address whether Rosa could assign such an interest to Winchester Estates. The court will note, however, that the plaintiff did not provide evidence of a valid assignment between Rosa and Winchester Estates.
The court must also briefly address the plaintiff's argument that the court may reform the mechanic's lien to reflect a service commencement date after Winchester Estates acquired title to the property, thus limiting the mechanic's lien to work undertaken after that date. In support of the conclusion that a court may invalidate a mechanic's lien in cases of after-acquired titles, our Supreme has noted " that § 49-33(b) explicitly provides that a lien has precedence over claims arising after the date of commencement of services. There is nothing in the text of the statute to indicate that a court is free to choose a different priority date or to otherwise reform the lien in accordance with existing law. While innocent clerical errors or misstatements that do not prejudice the opposing party are not necessarily fatal to a lien . . . [the lienholder] has not argued that the [commencement date on the mechanic's lien] was an error, clerical or otherwise." New England Savings Bank v. Meadow Lakes Realty Co., supra, 243 Conn. 620-21 n.20. In the present case, having found that the mechanic's lien is invalid because the plaintiff lacked valid consent on August 3, 2005, and absent any argument that use of a date prior to the transfer of title to Winchester Estates was an innocent error, the court may not reform the mechanic's lien to a date that would render the mechanic's lien valid.
The plaintiff argues that any reformation of the mechanic's lien to correct the commencement date of work to one after Winchester Estates acquired title to the property would be permissible because it would not prejudice the moving defendants. A finding of lack of prejudice is necessary before the court may correct an innocent clerical error or misstatement. New England Savings Bank v. Meadow Lakes Realty Co., supra, 243 Conn. 621 n.20. (" [I]nnocent clerical errors or misstatements that do not prejudice the opposing party are not necessarily fatal to a lien.") When the reformation sought is not the result of such innocent error, whether or not the opposing parties would be prejudiced is not relevant to the issue of whether the court may reform the mechanic's lien to make an otherwise invalid lien valid. Id. Therefore, having found that the lien is invalid due to the fact that the plaintiff acquired title after the commencement of services, and the date listed as the commencement date does not reflect an innocent error, the court need not determine whether reformation of the mechanic's lien to reflect a latter commencement date would prejudice the moving defendants.
For the foregoing reasons, the court finds that the mechanic's lien recorded by the plaintiff against Winchester Estates is invalid. Therefore, the court grants the moving defendants' motions for summary judgment.