Opinion
No. CV 04-4003709 S
November 24, 2009
MEMORANDUM OF DECISION
On April 15, 2005 a judgment against the defendant on a debt was entered. On November 13, 2007 the defendant filed a motion to open the judgment based on a claim that she has two good defenses to the claim and that she had no notice of the pendency of the action. On the same date the defendant filed a motion to dismiss based on a claim that there was no personal jurisdiction over the defendant since service did not comply with the requirements of Section 52-57(a) as to service of process.
The issue before the court concerns the collateral estoppel effect of a ruling by the United States Bankruptcy Court.
The defendant alleges that on December 13, 2006 she filed for bankruptcy protection pursuant to Chapter 13 of the U.S. Bankruptcy Code. She states that on April 16, 2007 she "filed a proof of claim in the Bankruptcy Court based on the default judgment it received in the present case" — that is the subject of the claim in the case now before the court. The defendant further represents in a July 6, 2009 memorandum that after a hearing the Bankruptcy Court "issued its Memorandum Order on Objection to Claim dated April 15, 2009, disallowing the plaintiff's claim based on the default judgment, as the State Court lacked sufficient personal jurisdiction over the defendant and found the underlying claim unenforceable against the defendant, who never entered into a credit card relationship with the creditor."
As a result of the foregoing the defendant claims that the Bankruptcy Court's decision that this court lacked jurisdiction over the defendant and that the defendant did not enter into the credit card agreement at issue in this case should be binding on this court by means of application of the doctrine of collateral estoppel. The plaintiff argues that collateral estoppel does not apply.
The court will first discuss the general principles governing a claim of collateral estoppel and its application; then it will try to apply its understanding of the doctrine to the facts of this case as regards the issue of the acquisition of personal jurisdiction.
I
The same fundamental principles lie behind the doctrines of collateral estoppel and res judicata. In this case an issue of collateral estoppel is raised clearly as to the decision that the court did not acquire jurisdiction over the defendant.
As to collateral estoppel the court in Lyon v. Jones, 291 Conn. 384, 406 (2009) quoted from an earlier case to the effect that:
Collateral estoppel, or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties on a different claim. (Emphasis by this court.)
This is the general law as reflected in 47 Am.Jur.2d "Judgment" § 464, 493 where it also notes the doctrine applies to "parties and their privies," also see Carothers v. Capozziello, 215 Conn. 82, 94-95 (1990).
The prerequisite for the application of collateral estoppel are nicely summed up in a federal case. In Matter of Lombard, 739 F.2d 499, 502 (10th Cir. 1984), where the court said:
The doctrine of collateral estoppel precludes relitigation of issues actually and necessarily decided in a prior action . . . It can only be applied to subsequent actions when (1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.
This reflects our law as noted in Carothers v. Capozziello, supra, Lafayette v. General Dynamics Corp., 255 Conn. 762, 773 (2001), Crochiere v. Board of Education, 227 Conn. 333, 342-43 (1993).
The predicate to the application res judicata is that claim preclusion or issue preclusion require a final judgment by a court whose judgment is given res judicata effect. There are no Connecticut decisions on this issue but the general law seems to be set forth in 47 Am.Jur.2d, "Judgments" at § 515, page 76: "Of course principles of res judicata are fully applicable to federal court judgments, including bankruptcy courts, whether such a judgment is sought to be so asserted in another federal court or in a state court," see also 30 Am.Jur.2d, "Executions and Enforcement of Judgments," § 701, pp 613-14. For example McNeary v. Senecal, 197 A.2d 835, 836, 837 (603 N.Y.S.2d) (App.Div. of Supreme Court of N.Y., 1993), barred relitigation in a state action of a matter litigated in Bankruptcy Court on collateral estoppel grounds. The case of Virgo v. Lyons, 209 Conn 497 (1988), is also relevant to this issue. There the Court held that the principles of collateral estoppel supported the defendant's motion for summary judgment in a state action based on state common-law torts because in Federal District Court the plaintiff's rights under section 1983 were litigated. The court reasoned that . . ."both causes of action arose out of the same alleged wrongs, allegedly committed by the same defendants, and involved the same injuries," id., p. 502. This Court can see no reason why res judicata principles should apply to Federal District Court judgments and not those of the Federal Bankruptcy Court. See also Shell Oil Co. v. Texas Gas Transmission Corp., 176 So.2d 692 (CT of App La., 1964) which was a nondiversity action; the Court citing 28 U.S.C § 1738 held the statute where collateral estoppel is raised, "requires each state to give the same effect to the judgments of State and Federal Courts as those judgments have in the jurisdictions were rendered," id., page 696. Stoll v. Gottlieb, 305 U.S. 165, 170 (1938) held that "Judgments and decrees of the Federal Courts in a state are declared to have the same dignity in the courts of that state as those of its own courts in a like case and under similar circumstances." That case involved a res judicata claim preclusion issue as opposed to collateral estoppel issue preclusion but the latter is a subset of res judicata in general and it is difficult to see why claim preclusion would apply and not issue preclusion if res judicata is otherwise established. Also Stoll v. Gottlieb involved an order of a Federal District Court that conducted a proceeding to reorganize a corporation under the Federal Bankruptcy Act. The Court can see no rational reason to bar judgments of federal Bankruptcy Court, established to enforce that the Bankruptcy Act from having res judicata effect in state proceedings. Or to put it another way in a federal system, the federal interest in having judgments of its courts, of whatever stripe, binding under res judicata principles on State Court proceedings, is necessary to the efficient and rational operation of that federal system and particularly with regard to implementation of federal legislation.
The Court will try to apply the foregoing analysis to the facts of this case. The question before the court is whether the doctrine of collateral estoppel precludes the litigation of this matter in state court because of the judgment of the bankruptcy court to the effect that when judgment was entered in state court, that court had no personal jurisdiction over the defendant when judgment was entered. The Court has previously cited Matter of Lombard and the four tests it applied to determine whether collateral estoppel should apply. As noted our court has adopted the same test. Collateral estoppel can only apply subsequent actions when:
(1) The issue previously decided is identical with the one presented in the action in question.
(2) The prior action has been finally adjudicated on the merits.
(3) The party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication.
(4) The party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.
The Court has read the Notice of Bankruptcy Order and the Memorandum of Decision by Bankruptcy Judge Dabrowski. It has also reviewed the August oral argument in this case. There does not seem to be any dispute between the parties concerning whether the first three parts of the Matter of Lombard test have been met. Judge Dabrowski in a memorandum of decision disallowed this claim on the grounds that the Superior Court "lacked sufficient personal jurisdiction over the debtor (Delores Hall) to render judgment against her." He determined abode service was not made; Mrs. Hall did not live at the residence where the papers initiating litigation were left (§ 52-54 CGSA). The matter was finally adjudicated; Judge Dabrowski not only concluded the Superior Court lacked in personam jurisdiction but also concluded the claim underlying the judgment "is unenforceable against the debtor on the merits."
The only criterion that must be examined is the fourth — did the plaintiff have a full and fair opportunity to litigate the issue in the Bankruptcy Court. The Court has reviewed the hearing before the Bankruptcy Court. It started at 10 a.m. and went to 12:23 a.m. It consumed 133 pages. Mrs. Hall testified at length about the issue at hand and was subjected to cross examination. She testified that at the time the papers initiating litigation were served at the residence which was owned by her, she did not live there. She stated it was occupied by her daughter. In other words proper abode service was not made pursuant to § 52-54 of the general statutes because the papers were not served at her usual place of residence. This is the same argument made by way of a motion to dismiss in this state action by way of a motion to dismiss filed November 13, 2007.
It appears that plaintiff's counsel was informed of the personal jurisdiction issue the day before the hearing. But at the end of the hearing counsel could only suggest two witnesses that might advance its position — the marshal who served the papers and the daughter of Mrs. Hall whom she alleged was the person actually living at the residence where the papers were served. The hearing was held August 11, 2007 but Judge Dabrowski gave plaintiff's counsel until September 11, 2007 to depose her or subpoena her to court and gave the same opportunity regarding the marshal. The Judge suggested there would be a renewed hearing September 24, 2007, if counsel deemed it to be necessary.
Counsel for Mrs. Hall in the Bankruptcy Court stated that at the time of the hearing Mrs. Hall's daughter was stricken with cancer, had emotional issues and was dying. In the August 2009 hearing before this Court plaintiff's counsel said, that because of her condition, he had been reluctant to contact the daughter to arrange for a deposition at her home as suggested by Judge Dabrowski. There was some indication that on some days the daughter was capable of offering testimony. But although the hearing in Bankruptcy Court was held on August 21, 2007, Judge Dabrowski's decision was not issued until April 15, 2009. There is no indication that further continuances were sought by the plaintiff in Bankruptcy Court. Perhaps more to the point, although this Court recognizes the defendant Hall has the ultimate burden on meeting the Matter of Lombard criteria, plaintiff's counsel at the hearing before this Court offered nothing by way of proof or evidence as to whether and what attempts were made to depose the daughter in her home or to bring her to court after the August 2007 Bankruptcy Court hearing. And to look at the matter from another perspective let us assume the daughter had passed away soon after the hearing in Bankruptcy Court or was so very ill she could not be deposed of prior to September 11, 2007 or be subpoenaed into court. Does that mean that the defendant Hall could not present a collateral estoppel argument or that it would be unfair for her to do so or that the one hearing actually held was unfair? That does not seem to be a rational way to decide the collateral estoppel issue. Unfairness in this context, at least to this court, means not being given sufficient time to prepare any argument a plaintiff might have because of short notice of a defense. Here the Bankruptcy Court gave a fair amount of time to investigate a rebuttal of Hall's testimony as to residence despite notice of the defense only shortly before the hearing. There is of course no indication that this personal jurisdiction defense was purposely delayed to take advantage of the daughter's worsening condition. Plaintiff's counsel at the Bankruptcy Court hearing only suggested two lines of inquiry to contest Mrs. Hall's representations as to residence — questioning the daughter on the marshal who served the original papers. Fairness should be viewed in that factual context; it is not as if it was suggested time was needed, for example, to interview neighbors and friends of Hall to try to rebut her statements as to where she lived at the time in question and the request was denied.
The motion to dismiss is granted.
It would seem that res judicata in the claim preclusion sense would also apply here since the Bankruptcy Court decided there was no merit to the underlying claim. But the defendant's brief raises a collateral estoppel argument which would seem to apply only to the personal jurisdiction issue and the brief in the main also seems to argue that.