Scalise v. East Greyrock, LLC , 148 Conn. App. 176 ( 2014 )

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RICHARD SCALISE ET AL. v. EAST
GREYROCK, LLC, ET AL.
(AC 35323)
Alvord, Sheldon and Pellegrino, Js.
Argued November 14, 2013—officially released February 11, 2014
(Appeal from Superior Court, judicial district of
Hartford, Peck, J.)
Kirk D. Tavtigian, Jr., for the appellants (plaintiffs).
Elizabeth M. Cristofaro, with whom, on the brief,
were Lila M. McKinley and Jennifer Katz, for the appel-
lees (defendants).
Opinion
SHELDON, J. The plaintiffs, Richard Scalise and Elea-
nor Mihailidis, appeal from the judgment of the trial
court granting the motion of the defendants, East Greyr-
ock, LLC, Greyrock at Oysterbend, LLC, and Jerry
Effren, both as trustee and in his individual capacity,
to dismiss the plaintiffs’ vexatious litigation complaint
on the ground that it is unripe for adjudication. The
plaintiffs argue on appeal that their vexatious litigation
action is ripe for adjudication despite the fact that sev-
eral counts of the complaint in the underlying action
remain pending, now as when this action was com-
menced, because the favorable termination require-
ment has been satisfied as to several of the underlying
claims upon which the present action is based. We
disagree with the plaintiffs and thus affirm the judgment
of the court.
The following facts and procedural history are rele-
vant to our resolution of this appeal. In 2004, the defen-
dants, with the exception of Jerry Effren in his
individual capacity, commenced an action against the
plaintiffs and filed an eighteen count1 complaint in con-
nection with the plaintiffs’ sale to them of a property
that the defendants claimed had been environmentally
contaminated (underlying action).2 Before the start of
trial in the underlying action, the parties entered into
an agreement to arbitrate certain claims and to bifurcate
the proceedings into separate liability and damages
phases, with the arbitrator to hear the liability phase
and the court to hear the damages phase.3 Those claims
were subsequently arbitrated and the arbitrator found
for the plaintiffs on all but three claims and also found
count seventeen to be nonjusticiable. On October 6,
2009, the plaintiffs moved to confirm those arbitration
findings in their favor as well as to modify or vacate
those with which the arbitrator found against them. On
August 2, 2010, the court remanded the case back to
the arbitrator for further proceedings or consideration
of certain issues identified by the court that it believed
the arbitrator had failed to address.4 Thereafter, the
plaintiffs moved for reargument of the motion to vacate,
modify and correct the arbitrator’s award, raising as an
additional ground that the award was insufficient. On
December 1, 2011, the court granted the motion in part
and remanded the case back to the arbitrator.5 Since
that time, no order has been issued by the court confirm-
ing or vacating any supplemental award of the arbitra-
tor, nor has any such award been issued by the
arbitrator, nor has the damages phase of the case been
scheduled by the court.
The plaintiffs brought the present vexatious litigation
action in 2011. The defendants filed motions to dismiss
on June 14, 2012, arguing that the plaintiffs’ vexatious
litigation claim was not yet ripe for adjudication
because the underlying action was still pending, the
plaintiffs’ claims had not yet terminated in their favor,
and thus that the court lacked jurisdiction to hear the
claim.6 The court granted the defendants’ motions to
dismiss on January 4, 2013.7 This appeal followed.
We first address the issue of ripeness and the court’s
determination that it lacked subject matter jurisdiction
over the plaintiffs’ action because their claims were not
yet ripe for adjudication. We conclude that the court
ruled properly that the plaintiffs’ claims were not ripe
and that it therefore lacked jurisdiction over the action.
‘‘[I]t is well established that, in determining whether
a court has subject matter jurisdiction, every presump-
tion favoring jurisdiction should be indulged. . . .
When reviewing an issue of subject matter jurisdiction
on appeal, [w]e have long held that because [a] determi-
nation regarding a trial court’s subject matter jurisdic-
tion is a question of law, our review is plenary. . . .
Subject matter jurisdiction involves the authority of the
court to adjudicate the type of controversy presented
by the action before it. . . . [A] court lacks discretion
to consider the merits of a case over which it is without
jurisdiction. . . . The subject matter jurisdiction
requirement may not be waived by any party, and also
may be raised by a party, or by the court sua sponte,
at any stage of the proceedings, including on appeal.’’
(Citations omitted; internal quotation marks omitted.)
Keller v. Beckenstein, 305 Conn. 523, 531–32, 46 A.3d
102 (2012). Further, ‘‘[t]his court does not have jurisdic-
tion to resolve a controversy that is not ripe for adjudi-
cation.’’ Bloom v. Miklovich, 111 Conn. App. 323, 336,
958 A.2d 1283 (2008).
‘‘The cause of action for vexatious litigation permits
a party who has been wrongfully sued to recover dam-
ages. . . . In Connecticut, the cause of action for vexa-
tious litigation exists both at common law and pursuant
to statute. Both the common law and statutory causes
of action [require] proof that a civil action has been
prosecuted. . . . Additionally, to establish a claim for
vexatious litigation at common law, one must prove
want of probable cause, malice and a termination of
suit in the plaintiff’s favor. . . . The statutory cause of
action for vexatious litigation exists under [General
Statutes] § 52-568, and differs from a common-law
action only in that a finding of malice is not an essential
element, but will serve as a basis for higher damages.’’
(Internal quotation marks omitted.) Spilke v. Wicklow,
138 Conn. App. 251, 259, 53 A.3d 245 (2012), cert. denied,
307 Conn. 945, 60 A.3d 737 (2013).
Further, ‘‘[a] condition precedent to the institution
of an action for vexatious litigation is that the original
action has terminated unsuccessfully. As our Supreme
Court explained, [w]e have held that a claim for vexa-
tious litigation requires a plaintiff to allege that the
previous lawsuit was initiated maliciously, without
probable cause, and terminated in the plaintiff’s favor.
. . . In suits for vexatious litigation, it is recognized to
be sound policy to require the plaintiff to allege that
prior litigation terminated in his favor.’’ (Emphasis
omitted; internal quotation marks omitted.) Somers v.
Chan, 110 Conn. App. 511, 542, 955 A.2d 667 (2008).
‘‘Thus, for a vexatious litigation claim to be ripe for
adjudication, the party must allege, among other facts,
that the allegedly vexatious litigation has terminated in
its favor.’’ Keller v. Beckenstein, 122 Conn. App. 438,
444, 998 A.2d 838 (2010), rev’d on other grounds, 305
Conn. 523, 46 A.3d 102 (2012). ‘‘This requirement serves
to discourage unfounded litigation without impairing
the presentation of honest but uncertain causes of
action to the courts. . . . The requirement furthermore
serves the interest of finality of judicial decisions, by
preventing a person who was unsuccessful in the origi-
nal proceeding from relitigating the same issues in a
subsequent action for vexatious litigation.’’ (Citation
omitted; internal quotation marks omitted.) Zeller v.
Consolini, 235 Conn. 417, 424, 667 A.2d 64 (1995).
We conclude that the underlying litigation upon
which the plaintiffs’ vexatious litigation claim is
founded has yet to terminate fully in their favor. The
liability phase of the underlying action remains ongoing
as the court has remanded the action back to the arbitra-
tor for additional findings as to the plaintiffs’ special
defenses, and the damages phase has yet to take place.
Further, because not all of the counts directed against
the plaintiffs were adjudicated by the arbitrator and
confirmed by the court, the underlying litigation is still
subject to the possibility of appeal.8 In addition, there
is no dispute that count seventeen of the underlying
complaint, which alleges that the other corporate enti-
ties sued in the underlying action were dissolved and
the plaintiffs were derivatively liable as shareholders
at the time of the dissolution for any liability of the
corporations, remains pending as the arbitrator has yet
to clarify his previous decision as to that count.9
The plaintiffs argue that because some of the claims
in the underlying action have been terminated in their
favor, they properly may proceed with their vexatious
litigation action as to those counts even though the
underlying litigation remains pending as to certain other
counts. There is no legal authority in our jurisprudence,
however, to support such a proposition.10 Granting the
plaintiffs permission to prosecute this action in these
circumstances would undermine the purpose of the
favorable termination requirement, which our Supreme
Court has noted, ‘‘serves to discourage unfounded litiga-
tion without impairing the presentation of honest but
uncertain causes of action to the courts.’’ Zeller v. Con-
solini, supra, 235 Conn. 424. ‘‘Two concerns underlie
the requirement of ‘successful termination.’ The first is
the danger of inconsistent judgments if defendants use
a vexatious suit or malicious prosecution action as a
means of making a collateral attack on the judgment
against them or as a counterattack to an ongoing pro-
ceeding. . . . The second is the unspoken distaste for
rewarding a . . . ‘guilty’ party with damages in the
event that the party who instituted the proceeding did
not at that time have probable cause to do so.’’ (Cita-
tions omitted.) DeLaurentis v. New Haven, 220 Conn.
225, 251–52, 597 A.2d 807 (1991). ‘‘The question we must
resolve, then, is whether the [termination of the prior
action] implicates either of these concerns.’’ Bhatia v.
Debek, 287 Conn. 397, 410, 948 A.2d 1009 (2008).
Here, if the plaintiffs were permitted to proceed with
their vexatious litigation claim without first satisfying
the favorable termination requirement on all of the
claims raised in the underlying action, both of these
concerns would be implicated. The plaintiffs candidly
concede that the ‘‘defendants are not barred from taking
further action in the underlying lawsuit regarding the
court’s granting of the motion to strike counts five and
thirteen and entering summary judgment as to count
ten, because these counts were not adjudicated by the
arbitrator, and therefore defendants’ ability to challenge
the court’s ruling on appeal is not barred by defendants’
failure to file a motion to vacate.’’ There is no dispute
that the underlying counts one, two, three, six, seven,
eight, nine, eleven, twelve, fourteen, fifteen, sixteen,
and eighteen have terminated in favor of the plaintiffs.
This fact, however, does not permit the plaintiffs to
proceed with their vexatious litigation action without
a final termination in their favor with respect to counts
five, ten, thirteen, and seventeen, all of which still
remain pending. To permit the plaintiffs to do so would
vitiate the purpose of the favorable termination
requirement.
Because the underlying action has not fully termi-
nated in favor of the plaintiffs, as counts five, ten, thir-
teen, and seventeen remain pending, the plaintiffs are
barred from bringing their vexatious litigation action
until such time as all counts of the underlying action
have terminated fully in their favor. Accordingly, the
court properly granted the defendants’ motions to
dismiss.
The judgment is affirmed.
In this opinion the other judges concurred.
1
The underlying action consisted of the following eighteen counts: fraudu-
lent misrepresentation (count one); fraudulent nondisclosure (count two);
negligent misrepresentation (count three); violations of the Connecticut
Transfer of Establishments Act under General Statutes § 22a-134 (counts
four and five); violation of the Connecticut Unfair Trade Practices Act under
General Statutes § 42-110 et seq. (count six); violation of the Water Pollution
Control Act under General Statutes § 22a-452 (count seven); common-law
indemnification (count eight); private nuisance (count nine); wanton, willful,
and reckless misconduct (count ten); negligence (count eleven); statutory
negligence per se (count twelve); abnormally dangerous or ultra-hazardous
activities (count thirteen); violation of the Common Interest Ownership Act
under General Statutes § 47-264 (count fourteen); violation of the Common
Interest Ownership Act under General Statutes § 47-265 (count fifteen);
piercing the corporate veil (count sixteen); recoupment of distributions of
a dissolved corporation under General Statutes § 33-887 (count seventeen);
and constructive trust (count eighteen). With the exception of count four,
which was asserted only as to nonparties to the present action, each count
was asserted against either Scalise, Mihailidis, or both.
2
On October 6, 2004, the underlying complaint was brought by the defen-
dants, with the exception of Effren in his individual capacity, against the
plaintiffs in the present action and against the nonparties OBC Associates,
Inc., R&G Industries, Inc., Dickmont Realty Associates, and Donald Scalise.
In the underlying action, the defendants alleged that the plaintiffs made
negligent and fraudulent misrepresentations concerning the environmental
condition of the property purchased by the defendants and that the defen-
dants were damaged as a result. On October 21, 2005, the plaintiffs filed a
motion to strike several of the defendants’ claims, including counts one,
two, five, six, ten, eleven, thirteen, fourteen, and fifteen. The court granted
the motion to strike with respect to counts five, ten, and thirteen. Subse-
quently, the defendants filed an amended complaint on February 22, 2006,
in which they repleaded their recklessness claim (count ten), but permitted
judgment to enter with respect to counts five and eight, noting that they
reserved the right to appeal the court’s ruling striking those counts. On
November 15, 2007, the plaintiffs moved for summary judgment as to several
counts, including the defendants’ repleaded recklessness count ten. On
September 4, 2008, the court granted the plaintiffs’ motion only as to the
defendants’ recklessness count ten.
3
According to the arbitration agreement, the liability phase was to be
adjudicated first by the arbitrator and only questions of law would be review-
able by the court. The agreement further provided that the damages phase
would be tried by the court or a jury, but not by the arbitrator.
4
The court stated that the arbitrator, in consultation with counsel for all
parties, should decide on the form of these further proceedings and that
upon receipt of the arbitrator’s supplemental report or finding, the court
would enter rulings on the parties’ motion to confirm or vacate the award.
The court also noted confusion over the arbitrator’s decision as to count
seventeen, which the arbitrator dismissed on the basis of his finding that
this claim for the recoupment of distributions of a dissolved corporation
was more appropriate for the damages phase of the proceeding, and the
court remanded that issue back to the arbitrator.
5
The arbitrator’s decision with respect to count seventeen was included
in the court’s renewed order for remand.
6
The trial court consolidated the present vexatious litigation action with
a second vexatious litigation action commenced by the plaintiffs against
Cummings & Lockwood, LLC, stemming from the same underlying action.
Cummings & Lockwood, LLC, also moved to dismiss on the same grounds
on February 7, 2013.
7
On March 4, 2013, the court also granted the motion to dismiss filed by
Cummings & Lockwood, LLC. We also decide the plaintiffs’ appeal from
that judgment today. See Scalise v. Cummings & Lockwood, LLC, 148 Conn.
App. 185, A.3d (2014).
8
The defendants preserved their right to appeal counts five and eight,
which were struck by the court prior to arbitration. In addition, the possibility
for appeal remains open as to both the decision on damages that has yet
to be adjudicated as well as the arbitrator and the court’s final findings as
to the liability aspect of the claim. Both parties could seek to appeal either
the arbitrator’s determinations or the court’s findings with respect to the
arbitrator’s determinations.
9
The arbitrator found that General Statutes § 33-887 does not establish
a cause of action, but rather constitutes a means of recovering an award
against a dissolved corporation. Thus, the arbitrator determined that there
was no justiciable question before him, noting that this claim would be raised
in the damages phase of the litigation. The court remanded the question
of the arbitrator’s designation of this count as nonjusticiable back to the
arbitrator, along with the plaintiffs’ claims that he failed to consider their
defenses.
10
The plaintiffs cite to three cases in support of this argument: Janetka
v. Dabe, 892 F.2d 187, 190 (2d Cir. 1989); DeLaurentis v. New Haven, 220
Conn. 225, 597 A.2d 807 (1991); Economy Petroleum Corp. v. Paulauskas,
Superior Court, judicial district of Hartford, Docket No. CV-00-0822116-S
(August 1, 2003) (35 Conn. L. Rptr. 347). These cases, however, do not stand
for the proposition that a plaintiff may proceed with a vexatious litigation
action despite the fact that the underlying litigation remains pending. Rather,
these cases hold that a plaintiff, in limited circumstances, may proceed
with vexatious litigation or malicious prosecution claims when the plaintiff
had prevailed on some, but not all, of the claims in the underlying action.
In each of these cases, however, the underlying action had terminated fully
prior to the plaintiff’s commencement of the vexatious litigation or malicious
prosecution action. Because the plaintiffs’ claims here are not logically
severable, this limited exception to the favorable termination requirement
does not apply. Accordingly, the plaintiffs must satisfy the general rule
requiring the favorable termination of all of the claims raised in their underly-
ing action prior to proceeding with their vexatious litigation claim.