Opinion
No. CV 02-0821526
April 17, 2007
MEMORANDUM OF DECISION
Before this court is defendants' motion to dismiss based upon plaintiff's lack of standing and plaintiff's motion to add parties plaintiffs to cure the potential jurisdictional defect. The two issues presented are whether or not defendants' motion to dismiss precludes the court from deciding plaintiff's motion and if not, whether or not the plaintiff has met the requirements of Conn. Gen. Stat. § 52-109.
Conn. Gen. Stat. § 52-109 provides:
When any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substantiated or added as plaintiff.
The complaint in this action alleges that the defendant Eric Onore was an employee or a partner of the law firm of Pagano Zuboff. On February 10, 1995, a lease was entered into between Granite Associates (hereinafter "Granite"), a partnership, as landlord and Peter Gural as tenant pertaining to premises known as 2175 Berlin Turnpike, Newington, Connecticut. After the execution of that lease during the year 1995, all the partners of Granite Associates conveyed their right, title and interest in and to the partnership to John H. Scelza, the plaintiff herein. Scelza retained defendants Onore and Pagano Zuboff (hereinafter referred to as "Onore") in 1996 to maintain a lawsuit against the tenant Peter Gural for breach of the lease agreement. In that lawsuit Gural counterclaimed for breach of the lease, fraud and a violation of Connecticut Uniform Trade Practices Act. On May 10, 2002, a jury returned a verdict in favor of Gural and against Granite on both Granite's claim against Gural for breach of the lease and on Gural's counterclaim against Granite in the amount of $83,000 plus $35,052.75 in attorneys fees. The court in that case awarded interest and punitive damages resulting in a total judgment against Granite in the amount of $201,661.44. After an appeal was initiated, the matter was settled by the parties for $190,000. Plaintiff Scelza then brought the instant action against Onore for legal malpractice in its representation of him in the Gural action.
Further facts are that on August 18, 1997, plaintiff Scelza, acting as a partner in Granite, executed a "Certificate of Name Change" attesting to the fact that Granite had been converted to a limited liability company, JHS, LLC. The certificate was filed on the Newington Land Records. On the same day Scelza, acting as a partner of Granite, executed a quitclaim deed transferring title to the Berlin Turnpike property from Granite to JHS, LLC.
On January 29, 2007, defendants moved to dismiss this action on the ground that the plaintiff Scelza lacks standing to prosecute this lawsuit and the court therefore, lacks subject matter jurisdiction over the matter. The defendants assert that the proper party plaintiff is JHS, LLC, as a successor entity to Granite.
The plaintiff argues that Conn. Gen. Stat. § 34-301 defines the term "partnership" to mean "an association of two or more persons to carry on as co-owners a business . . ." As a result, when plaintiff obtained the interests of the other partners of Granite in 1995, he became the sole owner and there was no longer a partnership because there was not "an association of two or more persons." The plaintiff further cites § 34-23 which reads, "If a person holds all of the partners' interest in the partnership, all of the partnership property vests in that person." Plaintiff was exposed to personal liability for the Gural judgment because Section 34-327 provides, ". . . all partners are liable jointly and separately for all obligations of the partnership unless otherwise agreed by claimant or provided by law." Thus, plaintiff Scelza claims he is the real partner in interest and has standing to bring this action.
Defendant replies that the assignment of all of the partners of their interest in Granite to Scelza occurred on August 31, 1995 which was before Connecticut, in 1997, adopted the Revised Uniform Partnership Act. Plaintiff's reliance on § 34-323(d) relating to the transfer of partnership interest to a single partner is misplaced because that section did not exist under the pre-July 1, 1997 statute. Moreover, § 34-68, which was in effect prior to July 1, 1997, provided, "On dissolution the partnership is not terminated but continues until the winding up of partnership affairs is completed." Thus, defendant argues Granite continued to exist for purposes of winding up its business which included the filing of the lawsuit against Gural and defending Gural's counterclaim. The judgment was against Granite as part of the continuing "winding up" of that partnership's business and when Granite was converted to the JHS, LLC, that entity assumed the liabilities of the partnership and thus is the proper party to bring this lawsuit against Onore.
However, before deciding that question, the court must first determine whether or not defendants' motion to dismiss precludes the court deciding plaintiff's motion to add parties plaintiff.
The black letter law is that jurisdictional issues must be decided first. As the Supreme Court said in Federal Deposit Insurance Corp. v. Peabody, N.E., Inc., 239 Conn. 93, 99 (1996), "`It is axiomatic that once the issue of subject matter jurisdiction is raised, it must be immediately acted upon by the court.' (citations omitted) . . . `Whenever the absence of jurisdiction is brought to the notice of the court or tribunal, cognizance of it must be taken and the matter passed upon before it can move one step further in the cause; as any movement is necessarily the exercise of jurisdiction.'" (Citations omitted.)
The rule to decide jurisdictional issues first has a strong conceptual basis and surface appeal. It appears to make sense that a court must determine its jurisdiction over a matter before it can decide other motions in the case. If, however, a motion is made to substitute or add a party plaintiff in order cure the potential jurisdictional defect, the rule starts to lose common sense.
Jurisdiction is the magic word. If the second motion were entitled "Motion to Cure Potential Jurisdictional Issue by Adding a Party Plaintiff," would that make it a jurisdictional motion and so allow it to be decided together with the motion to dismiss? But this court will not dwell on linguistics.
Trial court judges are in the front line trenches of the dilemma created by a motion to dismiss followed by a motion to add or substitute party plaintiff, pursuant to Section 52-109, to cure the jurisdictional defect. In recent years, fourteen Superior Courts have decided not to let the motion to dismiss preclude them from deciding the motion to substitute or add party plaintiff.
The leading and best reasoned case is DiLieto v. County Obstetrics Gynecology Group et al., 26 Conn. L. Rptr. 345 (January 31, 2000, Sheldon, J.). In that case the defendant moved to dismiss because, prior to filing the suit, plaintiffs had filed a joint petition for bankruptcy. Defendant claimed the trustee in bankruptcy was the proper party plaintiff. The plaintiff moved to substitute the trustee as party plaintiff, pursuant to Section 52-109. The trial court granted the motion. It reasoned that Section 52-109 is a remedial statute and should be liberally construed, quoting Federal Deposit Insurance Corp. v. Retirement Management Group, Inc., 31 Conn.App. 80, 84 (1993), "Our rules of practice, however, permit the substitution of parties as the interests of justice require." The court further reasoned that an action commenced "in the name of the wrong person" would inexorably establish that the original plaintiff had no standing to prosecute the action. Since a court, on its own motion, can dismiss an action for lack of jurisdiction, it follows that a court can never decide a motion to substitute plaintiffs because it would first be required to dismiss for lack of subject matter jurisdiction. That would render Section 52-109 a nullity.
As Judge Sheldon said, "The legislature's provision of this statutory remedy [Section 52-109] would be completely undermined by any rule requiring the immediate dismissal for lack of subject matter jurisdiction of an action commenced in the name of the wrong person as plaintiff. The statute, as an exercise of the legislature's constitutional authority to determine this court's jurisdiction . . . must be seen as an extension of that jurisdiction for the limited purpose of deciding a proper motion to substitute." Thus Judge Sheldon concluded that the court can decide the motion to substitute if the action can be saved from dismissal by so doing.
DiLieto was reversed at 265 Conn. 79 (2003), on the grounds of improper preclusion of evidence. The Supreme Court never ruled or commented on the trial court allowing the substitution of party plaintiff when a motion to dismiss had been filed.
In Lupinacci v. Stamford, 48 Conn.Sup. 1 (June 3, 2003) [ 32 Conn. L. Rptr. 672], the plaintiff brought an action in his individual name. The defendant moved to dismiss on the grounds that the subject property was owned by a partnership which was the real party in interest. The plaintiff moved to substitute the partnership as party plaintiff. The court granted the plaintiff's motion on the grounds that "Where substitution is necessary for the determination of the real matter in dispute, the issues of substitution may be addressed under the reasoning that the court should liberally interpret the rules of practice in any case where it shall be manifested a strict adherence to them would work injustice.
The following superior court cases have ruled on motions to substitute a party plaintiff while a motion to dismiss for lack of subject matter jurisdiction was pending: Wilson v. Zemba, 49 Conn.Sup. 542 (2004) [ 38 Conn. L. Rptr. 272]; Allen Construction, Inc. v. Cabanilla, judicial district of Fairfield at Bridgeport, CV 00-0376419S (June 7, 2001, Rush, J.); Weiss v. Weiss, judicial district of Windham, No. CV 00-65932 (January 9, 2002, Kocay, J.); Nygren v. Steier, 28 Conn. L. Rptr. 699 (January 10, 2001, Doherty, J.); Reiner v. West Hartford, judicial district of New Britain, No. CV 00-0502686S (March 22, 2001, Aronson, J.T.R.); First Federal Bank v. Rock Hill Assn., Inc., judicial district of New Haven, No. CV 93-0354947S (February 25, 1994, Celotto, J.T.R.); ITT Semiconductors v. Matheson Gas Products, 5 Conn. L. Rptr. 80 (October 2, 1991, Maiocco, J.); Estate of Olsen v. Circa Builders, LLC, 31 Conn. L. Rptr. 649 (March 22, 2002, Wagner, J.T.R.); Tomo 95, LLC v. LNIS Realty, F.L.P., 37 Conn. L. Rptr. 703 (August 31, 2004, Silbert, J.); Presence Studios Westport v. Freelife Intern, LLC, 38 Conn. L. Rptr. 336 (November 30, 2004, Doherty, J.); Sockwell v. Farias-Barret, 40 Conn. L. Rptr. 136 (October 19, 2005; Matasavage, J.); BKM Floor Covering, Inc. v. Orlando Annulli Sons, Inc., 29 Conn. L. Rptr. 657 (May 2, 2001, Berger, J.). See also W. Horton K.K. Knox, Connecticut Practice Series, Superior Court Rules (2007 edition) § 9-20, pp. 428-29.
Underlying all of these cases is the trial court's refusal to allow the rule to decide jurisdiction first trump practicality and common sense. The granting of a motion to dismiss, without first deciding a motion to substitute or add plaintiffs in order to cure the jurisdictional defect, would result in the plaintiff having to start the action again, serve the defendant, pay the marshal's fee, file the suit in court, and pay the court filing fee. What a waste. All this can be avoided by the court granting the motion to substitute party plaintiff and thereby immediately curing the alleged jurisdictional defect.
Based on these trial court authorities and the common sense they make, this court determines that it can determine plaintiff's motion to add parties plaintiffs.
Turning to § 52-109, it provides two criteria for granting a motion to substitute or add a party plaintiff when the action has been commenced in the name of the wrong person as plaintiff: namely it must be satisfied that the action was commenced through mistake and that deciding the motion is necessary for determination of the real matter in dispute.
Mistake is not defined in the statute. The court in DiLieto said that mistake means, "Any honest conviction, entertained in good faith and not resulting from a plaintiff's own negligence that she is the proper person to commence the lawsuit."
In Wilson v. Zemba, 49 Conn.Sup. 542 (2004) [ 38 Conn. L. Rptr. 272], another well reasoned opinion, Judge Corradino found that definition to be too difficult to apply and too limiting. In determining whether or not the plaintiff had "an honest conviction, entertained in good faith" requires going into the mind of the plaintiff. Moreover, mistake is almost always the result of negligence. As Judge Corradino said in Wilson v. Zemba, supra at 550. "When the legislature used the word `mistake,' a common sense appraisal of what they [sic] meant is merely to describe the context in which a statute was to apply — the lawyer named the wrong plaintiff."
In the instant case Scelza thinks he is the right plaintiff because under Section 34-301 a partnership means an association of two or more persons. Since he was the assignee of all the other partners' interests, under that definition the partnership ceased to exist. However, the partnership law at that time provided that the dissolution of a partner was not terminated but continued until a winding up of partnership affairs was completed. That section was repealed two years after the assignment to Scelza. The mistake, if one was made here, was plaintiff's attorney not properly interpreting the complicated and changing law of partnerships. It is the type of mistake, if one was made, which should be allowed to be corrected by adding additional parties plaintiffs.
The second criteria of the motion is that the substitution of plaintiff must be "necessary for determination of the real matter in dispute." If, as the defendant contends, Granite Associates and JHS, LLC are the real parties in interest, then clearly, allowing them to become parties plaintiffs is necessary for the determination of the matter in dispute. Plaintiff's attorney recognizes, but does not concede, he may have been wrong in bringing the action with Scelza as the plaintiff. In order to prevent the situation of winning the trial and then having the fruits of his victory snatched on appeal by having named the wrong plaintiff, he has moved for Granite and JHS, LLC to be added as parties. Judicial economy certainly warrants granting such a motion.
As stated in 59 Am.Jur.2d 748-49, parties Section 323(202) "The propriety of substitution of parties depends on whether the cause of action remains the same and whether the party substituted bears some relation of interest to the original party and to the litigation . . . Conversely, courts have allowed substitution in particular cases where the defendant was not prejudiced by the substitution . . ."
In Federal Deposit Ins. Corp. v. Retirement Management Group, Inc., supra, the court quoted F. James G. Hazard, Civil Procedures, Second Edition 1977, Section 5.7, pp. 167-68, to the effect that "Where the changes made on the plaintiff's side to supply an indispensable party or to correct a mistake in ascertaining the real party in interest, in order to pursue effectively the original claim, the defendant will rarely be unduly prejudiced by letting the amendment relate back to the original pleading."
In the instant case the cause of action is not changed, and the defendant is not prejudiced by the substitution of plaintiffs.
Based on the foregoing, the plaintiff's motion to add parties plaintiffs is granted and because that cures the jurisdictional defect, the defendants' motion to dismiss is denied.