Opinion
No. CV05 5000831S
June 14, 2006
MEMORANDUM OF DECISION MOTION TO STRIKE #112
The defendant, Kenneth R. Sosnoski, Jr. has moved to strike the complaint filed by the plaintiff, Edward Nusbaum, bearing a return date of December 20, 2005. Counts One and Two of the complaint allege a cause of action sounding in vexatious litigation pursuant to General Statutes § 52-568 in connection with the case of Homonnay v. Nusbaum, which was originally filed in the Federal Court for the District of Connecticut. Following a dismissal in federal court, the action was subsequently re-filed in the Superior Court Judicial District of Fairfield at Bridgeport, and was assigned Docket No. CV05 4011 886S.
The defendant, Sosnoski, argues that the plaintiff's complaint in the present case is insufficient as a matter of law because: (1) the underlying action has not been terminated in favor of the plaintiff, and therefore, the plaintiff cannot prove the requisite elements of General Statutes § 52-568; and (2) under the circumstances of this case, the plaintiffs cannot prove that the defendant lacked probable cause for the bringing of the action as a matter of law since "the action" is still pending and being litigated between the parties.
The plaintiff has filed an objection and a memorandum of law in opposition to the motion to strike, both of which are dated March 9, 2006. The basis of the objection will be discussed herein, when the court summarizes the procedural background of the federal court action, the companion pending case and the subject case.
I Legal Standard Re Motion to Strike The law regarding a motion to strike is well-settled. "The purpose of a motion to strike is to contest the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003); Mingachos v. CBS, Inc., 196 Conn. 91, 108, 491 A.2d 368 (1985). A motion to strike shall be granted if "the plaintiff's complaint [does not] sufficiently [state] a cognizable cause of action as a matter of law." Mora v. Aetna Life and Casualty Ins. Co., 13 Conn.App. 208, 211, 535 A.2d 390 (1988). A motion to strike "admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498. "A motion to strike is properly granted where a plaintiff's complaint alleges legal conclusions unsupported by facts." Id. "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." Gordon v. Bridgeport Housing Authority, 208 Conn. 161, 170, 544 A.2d 1185. (1988).In ruling on a motion to strike, the trial court construes the facts in the complaint in the manner most favorable to sustaining its legal sufficiency. "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be . . . Thus, [the court] assume[s] the truth of both the specific factual allegations and any facts fairly provable thereunder. In doing so, morever, [the court] read[s] the allegations broadly, rather than narrowly." (Citation omitted; internal quotation marks omitted.) Craig v. Driscoll, 262 Conn. 312, 321, 813 A.2d 1003 (2003). Furthermore, "[i]n ruling on a motion to strike, the court is limited to the facts alleged in the complaint. (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
II Procedural History
On December 7, 2004, the defendant, an attorney, commenced an action on behalf of Christopher Homonnay, Thomas Homonnay and Jill Homonnay against the plaintiff, who is also an attorney, and his firm of Nusbaum and Parrino, P.C. in the United States District Court for the District of Connecticut bearing docket number 304CV2082 MRK. ("Federal Court Action.") The defendant included, among other things, a claim under the Fair Debt Collection Practice Act, 15 U.S.C. § 1692a ("the FDCPA") upon which he sought federal jurisdiction. The subject matter of the federal action was a fee dispute and Nusbaum and his legal firm's attempts to collect a balance claimed due for the debt allegedly owed to their firm. According to the plaintiff Nusbaum's present complaint, the federal action was terminated "in the plaintiffs favor" on April 27, 2005 when the defendant Sosnoski, filed a notice of dismissal in behalf of his clients in the federal case in response to the Nusbaum defendants having filed a motion to dismiss in February 2005.
The Notice of Dismissal filed by Sosnoski in April 2005 on behalf of his clients who were the plaintiffs in the federal action is reproduced as follows:
UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT CHRISTOPHER HOMONNAY CASE NO.:3:04-CV-2082(MRK) THOMAS HOMONNAY; and JILL HOMONNAY Plaintiffs
v.
EDWARD NUSBAUM and NUSBAUM PARINO, P.C. Defendants NOTICE OF DISMISSAL
The Plaintiffs, pursuant to Fed. Rule Civ. Proc. 41 (a)(1), hereby dismisses the above action without prejudice and without costs or fees. In support of this notice, the Plaintiffs state the following:
1. This filing is before the service by the Defendants of an Answer;
2. This filing is before the service by the Defendants of a Motion for Summary Judgment (although a Motion to Dismiss has been filed in February 2005); and
3. The defendants are in agreement with this dismissal see Pollock 4/7/5 (sic) letter attached hereby as Exhibit A.
The Plaintiffs
BY /S/ Kenneth R. Sosnoski Jr. Attorney at Law 46 Riverside Ave. Westport, CT 06880 (203) 226-5601 Fed. Bar No. CT15904
Following Attorney Sosnoski's consent to the voluntary dismissal of his clients' federal court action, Sosnoski filed a new complaint in this court ("state court action") in behalf of his clients. The state court action filed by Sosnoski in behalf of his clients, the Homonnays, did not claim any violation of the Federal Debt Collection Practices Act, and thus, is not "identical" to the previous federal court action that was dismissed. The defendant Sosnoski argues, however, that the claims are "essentially the same."
Christopher Homonnay, et al vs. Edward Nusbaum, et al., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV05 4011886S.
A summary of the background which forms the basis of this dispute between the parties in the state court action is helpful. The same Homonnay plaintiffs as were listed in the federal action, filed an eight-count complaint in this court against Nusbaum and his legal firm for a breach of an implied covenant of good faith and fair dealing and violations of the Connecticut Unfair Trade Practices Act (CUTPA).
The allegations arise out of a fee dispute as a result of the representation by Nusbaum and his firm of the plaintiff Christopher Homonnay in a dissolution of marriage action. Christopher Homonnay signed a written retainer agreement with the defendants on or about March 27, 2003. Thomas Homonnay and Jill Homonnay also signed the retainer agreement as guarantors of the fees to be incurred by the Christopher Homonnay. The retainer agreement, contained a provision that any dispute arising out of or relating to any aspect of the contractual relationship would be submitted to binding arbitration before the American Arbitration Association.
The Homannays in their state court action alleged that Nusbaum and his firm charged Christopher Homonnay the sum of $397,831.28 in legal fees, of which the Homonnays paid $335,304.78, leaving a claimed balance due and owing to Nusbaum and his firm in the amount of $24,720 The Homannays claimed they demanded arbitration through the Connecticut Bar Association, but Nusbaum and his firm refused to submit to the Connecticut Bar Association arbitration proceedings; insisting, instead, that the arbitration be held by the American Arbitration Association in accordance with the terms of the retainer agreement.
The Homonnays in their state court legal action alleged that the fees charged by Edward Nusbaum and Parino Nusbaum, P.C. were unreasonable and "breaches the faithfulness of the agreed, common purpose of the retainer agreement in that the Christopher Homonnay thought he would only be charged a reasonable fee," and that the fees charged by Nusbaum were "excessive, unconscionable and contrary to public policy." The Hommonays further claimed that the defendants engaged in unfair or deceptive acts or practices in violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), General Statutes § 42-110b et seq.
In the state court action, Nusbaum and his firm filed a motion to dismiss for lack of jurisdiction, arguing that the retainer agreement signed by the Homonnays unequivocally provided that the parties must submit to binding arbitration before the American Arbitration Association. The court (Arnold, J.) agreed and granted the motion to dismiss the state court action by way of a decision dated May 3, 2006. See Christopher Homonnay, et al v. Edward Nusbaum, et al, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV05 4011886S (May 3, 2006, Arnold, J.)
Prior to the court's dismissal of the Homonnay state court action, the plaintiff Nusbaum filed the present action, bearing a return date of December 20, 2005, alleging in two counts vexatious litigation. The defendant Sosnoski filed the subject motion to strike and his memorandum of law on February 21, 2006. The plaintiff's objection and memorandum of law are dated March 9, 2006. This motion to strike was orally argued before the court on the short calendar held on April 3, 2006, one month before the court issued its decision dismissing the companion matter for a lack of jurisdiction. See Christopher Homonnay, et al v. Edward Nusbaum, et al, supra, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV05 4011886S, May 3, 2006, Arnold, J.) CT Page 11753
III Vexatious Litigation
The threshold questions for the court to address are whether a dismissal pursuant to Federal Rules of Civil Procedure § 41(a)(1), and the court's dismissal of the case of Christopher Homonnay, et al v. Edward Nusbaum, et al, supra, for lack of subject matter jurisdiction can be considered actions that were terminated in the favor of Nusbaum, so as to allow Nusbaum to pursue his claims against Sosnoski for vexatious litigation in accordance with General Statutes § 52-568.General Statutes § 52-568 reads as follows:
Any person who commences and prosecutes any civil action or complaint against another, in his own name or the name of others, or asserts a defense to any civil action or complaint commenced and prosecuted by another (1) without probable cause, shall pay such other person double damages, or (2) without probable cause, and with a malicious intent unjustly to vex and trouble such other person, shall pay him treble damages.
Our Appellate Court recently discussed vexatious litigation claims in Hebrew Home Hospital, Inc. v. Brewer, 92 Conn.App. 762, 766-68, 886 A.2d 1248 (2005).
"A vexatious suit is a type of malicious prosecution action, differing principally in that it is based upon a prior civil action, whereas a malicious prosecution suit ordinarily implies a prior criminal complaint . . . Vexatious suit is the appellation given in this State to the cause of action created by statute . . . for the malicious prosecution of a civil suit . . . which we have said was governed by the same principles as the common-law action of malicious prosecution." (Citation omitted; internal quotation marks omitted.) Falls Church Group, Ltd. v. Tyler, Cooper Alcorn, LLP, 89 Conn.App. 459, 467, 874 A.2d 266, cert. granted on other grounds, 275 Conn. 908, 882 A.2d 670 (2005). `In a malicious prosecution or vexatious litigation action, it is necessary to prove want of probable cause, malice and a termination of [the] suit in the plaintiffs' favor . . . [Establishing] a cause of action for vexatious suit requires proof that a civil action has been prosecuted not only without probable cause, but also with malice . . . It must also appear that the litigation claimed to be vexatious terminated in some way favorable to the defendant therein.' (Citations omitted; internal quotation marks omitted.) QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 361, 773 A.2d 906 (2001).
It is well settled that `[t]he existence of probable cause is an absolute protection . . . and what facts, and whether particular facts, constitute probable cause is always a question of law.' (Internal quotation marks omitted.) Zeller v. Consolini, 59 Conn.App. 545, 554 n. 5, 758 A.2d 376 (2000) . . . This court recently adopted an objective standard. "[A]n attorney's subjective belief in the tenability of a claim and the extent of an attorney's investigation and research have no place in determining the existence of probable cause in a vexatious litigation action against an attorney and . . . the presence or absence of probable cause should be judged by an objective standard.' Falls Church Group, Ltd v. Tyler, Cooper Alcorn, LLP, supra, 89 Conn.App. 473. `[T]he objective standard which should govern the reasonableness of an attorney's action in instituting litigation for a client is whether the claim merits litigation against the defendant in question on the basis of the facts known to the attorney when suit is commenced. The question is answered by determining that no competent and reasonable attorney familiar with the law of the forum would consider that the claim was worthy of litigation on the basis of the facts known by the attorney who instituted suit.' (Emphasis in original; internal quotation marks omitted.) Id., 474.
Hebrew Home Hospital, Inc. v. Brewer, supra, 92 Conn.App. 766-68.
As it must also appear that the litigation claimed to be vexatious terminated in some way favorable to the defendant, QSP. Inc. v. Aetna Casualty Surety Co., supra, 256 Conn. 361, this court first undertakes an analysis of the effect of the dismissal in federal court pursuant to Federal Rules of Civil Procedure § 41(a)(1).
IV Federal Rules of Civil Procedure, Section 41(a)(1)
Rule 41 governs dismissal of actions. Section 41 (a)(1) reads as follows:
(a) Voluntary Dismissal: Effect Thereof
(1) By Plaintiff; By Stipulation. Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, which ever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.
Therefore, the Homonnay plaintiffs in their original federal action were able to dismiss that action without the consent of the court or the Nusbaum defendants. Wilson v. City of San Jose, 111 F.3d 688, 692 (9th Cir. 1997); Smith Kline Beecham Corp. v. Pentech Pharmaceuticals, Inc., 261 F.Sup.2d 1002, 1004 (N.D. Ill. 2003). The dismissal by the plaintiffs under Rule 41(a)(1) was achieved by the filing of the notice of dismissal and no court order was required, In re Matthews, 395 F.3d 477, 480 (4th Cir. 2005) and the notice was effective when filed by Sosnoski on April 27, 2005. Marques v. Federal Reserve Bank of Chicago, 286 F.3d 1014, 1018 (7th Cir. 2002) (a judgment entered after a proper voluntary dismissal is void.) The Homonnays' voluntary dismissal of their own lawsuit left the situation as if the lawsuit had never been filed. See In re Matthews, supra.; see also, Vogel v. Am. Kiosk Mgmt., 371 F.Sup.2d 122, 129 (D. Conn. 2005); Wright Miller, Federal Practice and Procedure, § 2367 at 186. Since the notice of dismissal terminated the action, there is nothing the defendant can do to fan the ashes of that action into life and the court has no role to play . . . American Cyanamid Co. v. McGhee, C.A. 5th 1963, 317 F.2d 295, 297 (Carswell, J.). "[A] voluntary dismissal . . . wipes the slate clean, making any future lawsuit based on the same claim an entirely new lawsuit unrelated to the earlier (dismissed) action. Sandstrom v. Chemlawn Corp., C.A. 1st, 1990, 904 F.2d 83, 86 (Selya, J.) citing Wright Miller, Federal Practice and Procedure: Civil 2d § 2367 at 317-23.
A dismissal with prejudice would have subjected the dismissal to the usual rules of res judicata and would have been effective not only on the parties but their privies. See Havee v. Belk, C.A. 4th, 1985, 775 F.2d 1209; see also, Kaspar Wire Works, Inc. v. Leco Engineering Mach., Inc., C.A. 5th, 1978, 575 F.2d 530. However, the voluntary dismissal pursuant to Rule 41(a)(1) is not entitled to res judicata. It cannot be said to be a prior action that terminated in favor of Nusbaum, so as to furnish a basis for his present action for vexatious litigation. This is so despite the argument by Nusbaum that the Homonnays filed their voluntary notice of dismissal only after Nusbaum filed its own adversarial motion to dismiss the case. The Homonnay plaintiffs' right to a voluntary dismissal in their federal court action was not terminated or affected by the Nusbaum motion to dismiss. Esquivel v. Arau, D.C. Cal. 1996, 913 F.Sup. 1382.
V The State Court Action
As discussed previously, this court recently dismissed the Homannay plaintiffs' state court action on May 3, 2006 for lack of subject matter jurisdiction finding that the parties must submit to binding arbitration proceedings using the American Arbitration Association, as agreed upon in the written contract between the Homonnays and Nusbaum and his legal firm. Therefore, the question to be answered by the court is whether this dismissal of the state court action filed by the Homonnay plaintiffs, is a prior action that has terminated in favor of Nusbaum, so as to allow him to proceed with the subject legal action alleging vexatious litigation.
Nusbaum argues that the state court action has no bearing on his suit for vexatious litigation, and that his claim relies solely upon the "baseless claims filed by Sosnoski in behalf of the Homnonays in federal court which he alleges lacked probable cause. The court has already determined that the federal action did not terminate in Nusbaum's favor, as discussed herein. If the court were to strictly hold Nusbaum to his claim that his vexatious litigation suit is solely related to the federal suit, then the court could grant the motion to strike without further discussion.
However, the defendant Sosnoski has argued at length that he had probable cause to bring the state court action, which has since been dismissed for a lack of subject matter jurisdiction, and further, that the state court action contained the same essential elements as the federal action, except for the lack of the claim that Nusbaum was in violation of the Fair Debt Collection Practices Act. If the court were to find that the dismissal for lack of subject matter jurisdiction was a termination of a prior lawsuit in Nusbaum's favor, it would be the court's task to also address the issue of probable cause or a lack thereof, a task which more properly is left to a trier of fact.
The court determines it is necessary to undertake an analysis of the effect of its dismissal of the state court action filed by the defendant Sosnoski in behalf of his clients for a lack of subject matter disposition, the result of which, is a referral to the binding arbitration called for in the retainer agreement.
In doing so, the court is mindful that if it rules that the dismissal for lack of subject matter jurisdiction is a favorable termination in Nusbaum's favor, the possibility exists that an inconsistent judgment could result if the Homonnays prevail in the arbitration proceedings. See DeLaurentis v. City of New Haven, 220 Conn. 225, 248 (1991). Moreover, a lack of probable cause is an essential requirement of any vexatious litigation suit. If the binding arbitration terminates in favor of the Homonnays, such an outcome may very well be conclusive of the existence of probable cause for the institution of the state court action by the Homonnays, which is claimed to be vexatious. Merrill Lynch, Pierce, Fenner Smith, Inc. v. Cole, 189 Conn. 518, 538, 457 A.2d 656 (1983); Frisbie v. Morris, 75 Conn. 637, 639-40, 55 A.9 (1903). The possibilities are significant for a collateral attack on any arbitration finding in the Homonnays' favor by allowing this vexatious litigation suit by Nusbaum to survive the present motion to strike.
"Collateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." (Citation omitted; internal quotation marks omitted.) Walsh v. Stonington Water Pollution Control Authority, 250 Conn. 443, 460-61, 736 A.2d 811 (1999). Ancona v. Manafort Bros., Inc., 56 Conn.App. 701, 707, 746 A.2d 184 (2000).
In analyzing whether the prior dismissal of the state court action was a termination that favored Nusbaum, the court recognizes the established judicial principle that "voluntary recourse to arbitration proceedings allows the prevailing party, after a final arbitral judgment, to raise a defense of collateral estoppel or res judicata if the losing party thereafter initiates a judicial cause of action." Genovese v. Gallo Wine Merchants, Inc., 226 Conn. 475, 491, 628 A.2d 946 (1993.); Corey v. Avco-Lycoming Division, 163 Conn. 309, 318, 307 A.2d 155 (1972), cert. denied, 409 U.S. 1116, 93 S.Ct. 903, 34 L.Ed.2d 699 (1973); see also Convalescent Center of Bloomfield, Inc. v. Department of Income Maintenance, 208 Conn. 187, 198, 544 A.2d 604 (1988). "The applicability of principles of res judicata to arbitration proceedings reflects the confidence, ordinarily shared by the legislature . . . and by our courts, that arbitrators have the competence to decide complex issues of law and of fact." Genovese v. Gallo Wine Merchants, Inc., supra, 226 Conn. 491; see also, Bodner v. United States Automobile Ass'n., 222 Conn. 480, 489-91, 610 A.2d 1212 (1992).
The favorable judgment that Nusbaum is required to show in order to maintain this vexatious litigation action, is not the dismissal by this court of the state court action filed by the Homonnays for lack of subject matter jurisdiction, but rather, a favorable outcome in the arbitration proceedings, which is then confirmed by the court pursuant to General Statutes § 52-417. Until the binding arbitration matter before the American Arbitration Association is completed, Nusbaum is unable to prove that the state court action which is the subject of this vexatious litigation, terminated favorably in his behalf. It is at the arbitration proceedings that the parties will have the underlying issues fully litgated and determined. The court's dismissal of the state court action filed by the defendant, Sosnoski, for lack of subject matter jurisdiction was not an inquiry into the substantive merits or weaknesses of the allegations contained therein. Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005); Alter Associates, LLC v. Lantz, 90 Conn.App. 15, 25, 876 A.2d 1204. It is the arbitration proceedings that will provide the proper forum for a resolution of the disputes between relevant parties.
Sec. 52-417. Application for order confirming award reads as follows:
At any time within one year after an award has been rendered and the parties to the arbitration notified thereof, any party to the arbitration may make application to the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, to any judge thereof, for an order confirming the award. The court or judge shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52-418 and 52-419.
The court is aware that Nusbaum may face a statute of limitations problem if he must await a favorable final outcome of the arbitration proceedings before further proceeding with his claims for vexatious litigation. Pursuant to General Statutes § 52-577, a plaintiff must file an action within three years of the defendant's purported abuse. Timbers v. Updike, Kelly Spellacy, P.C., 83 Conn.App. 442, 444 (2004). Nusbaum argues that he may be deprived of the opportunity to bring a vexatious litigation claim. However, neither Nusbaum, the Homonnays or Sosnoski sought a stay of all court proceedings pursuant to General Statutes § 52-409, which reads as follows:
The federal court action by Sosnoski on behalf of the Homonnays was commenced Dec. 7, 2004, and the state court action was commenced on or about August 24, 2005. The retainer agreement was signed March 27, 2003.
If any action for legal or equitable relief or other proceeding is brought by any party to a written agreement to arbitrate, the court in which the action or proceeding is pending, upon being satisfied that any issue involved in the action or proceeding is referable to arbitration under the agreement, shall, on motion of any party to the arbitration agreement, stay the action or proceeding until an arbitration has been had in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration.
Indeed, Nusbaum chose instead to file a motion to dismiss the state court action filed by the Homonnays, rather than request a stay of proceedings for the purpose of arbitration under the retainer agreement. The court granted Nusbaum's motion to dismiss. See Christopher Homonnay, et al v. Edward Nusbaurn, et al, supra Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV05 4011886S, May 3, 2006, Arnold, J.). He cannot now complain that the remedy he sought, and was granted, places his claim for vexatious litigation in peril.
Accordingly for the reasons stated herein, the defendant Sosnoski's motion to strike the plaintiff Nusbaum's complaint dated November 18, 2005, is hereby granted.