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Snaider v. Account Control Technology, Inc.

United States District Court, D. Connecticut

June 6, 2018

BENSON A. SNAIDER, Plaintiff,
v.
ACCOUNT CONTROL TECH., INC., et al., Defendants.

          RULING RE: MOTION TO DISMISS BY ACCOUNT CONTROL TECHNOLOGY, INC. (DOC. NO. 33) AND MOTION TO DISMISS BY DEPARTMENT OF ADMINISTRATIVE SERVICES AND CONNECTICUT CLIENT SECURITY FUND (DOC. NO. 35)

          Janet C. Hall United States District Judge

         I. INTRODUCTION

         The plaintiff, Benson A. Snaider, filed his Amended Complaint on November 19, 2017, against the defendants Account Control Technology, Inc. (“ACT”), the Connecticut Department of Administrative Services (“DAS”), and the Connecticut Client Security Fund Committee (“CSF”). See Amended Complaint (“Am. Compl.”) (Doc. No. 20). In it, Snaider claims that the defendants violated a discharge injunction he obtained in Bankruptcy Court and that a state court order of restitution against him is unenforceable in violation of the discharge injunction. See id. at ¶¶ 43-51.

         ACT filed a Motion to Dismiss the Amended Complaint on January 3, 2018. See Motion to Dismiss Amended Complaint by ACT (“ACT Mot. to Dismiss”) (Doc. No. 33). DAS and CSF also filed a joint Motion to Dismiss the Amended Complaint on the same day. See Motion to Dismiss the Amended Complaint by DAS and CSF (“DAS/CSF Mot. to Dismiss”) (Doc. No. 35). The court addresses both Motions together in this Ruling.

         For the reasons stated below, ACT's Motion to Dismiss is GRANTED, and the Amended Complaint is DISMISSED as to all defendants. Because the court dismisses the Amended Complaint on the grounds stated in ACT's Motion to Dismiss, which apply equally to all defendants, the court does not reach all of the arguments in DAS and CSF's Motion to Dismiss.

         II. FACTS

         The Amended Complaint alleges the following facts.[1] Beginning on April 7, 2004, Snaider represented Minchin Buick, Inc. (“Minchin”) in negotiations with the City of Stamford (“the City”) regarding compensation for a proposed taking of Minchin's property for a public project. See Am. Compl. at ¶ 7. During negotiations, the City offered $800, 000, which Minchin rejected. See id. at ¶ 10. The City then initiated condemnation proceedings and deposited $800, 000 with the Superior Court, which Snaider deposited in his trust account. See id. at ¶ 11.

         Snaider appealed the City's offer and obtained a judgment of damages of $1, 143, 360 on June 1, 2011. See id. at ¶ 12. The City provided a second check of $469, 553.53, which Snaider delivered to Minchin on June 6, 2011. See id. at ¶ 14. Snaider revealed to Minchin that he did not have the $800, 000 previously deposited. See id. Minchin then sued Snaider in Stamford Superior Court and obtained a prejudgment remedy against Snaider. See id. at ¶ 15. Pursuant to the prejudgment remedy, Snaider paid Minchin $127, 804.15. See id. at ¶ 16. On June 22, 2011, Minchin then filed a claim with CSF, seeking reimbursement of the $800, 000. See id. at ¶ 17.[2]

         On February 12, 2012, Snaider and his wife filed for Chapter 7 bankruptcy, listing Minchin as a claimant. See id. at ¶ 18. Minchin's attorney appeared in the bankruptcy case, but did not object to the dischargeability of Snaider's debt to Minchin. See id. at ¶ 20. The Amended Complaint alleges that therefore Snaider's debt to Minchin was discharged by the discharge injunction entered by the Bankruptcy Court on May 30, 2012. See id. at ¶ 20. Minchin received $18, 705.12 in the final distribution of the bankrupt estate and, on January 13, 2013, withdrew its case before the Stamford Superior Court. See id. at ¶¶ 21-22. The Amended Complaint alleges that the withdrawal of the state court case prevented Minchin from substantiating its claim for reimbursement with CSF. See id. at ¶¶ 23-24.

         On April 11, 2012, Snaider had pleaded guilty to larceny in the first degree for his embezzlement of Minchin's funds. See id. at ¶¶ 25-26. He was sentenced to 5 years of probation, execution suspended, and “restitution for verifiable out of pocket expenses.” See id. at ¶ 26. On February 28, 2013, Minchin filed a Motion for Determination of Restitution in order to determine the amount of restitution and to order payment. See id. at ¶ 27. Sometime after July 20, 2013, the state court ordered restitution of $536, 000, payable to CSF. See id. at ¶¶ 30, 35. Snaider was ordered to pay $29, 777.79 every month until January 11, 2017. See id. at ¶ 34. The Amended Complaint alleges that the sole purpose of the Motion was to substantiate Minchin's application for payment to CSF, and that the payment was ordered to be made to CSF as reimbursement for its payment to Minchin. See id. at ¶¶ 32, 35.

         Snaider paid only $180 of the $536, 000 restitution. See id. at ¶ 36. On January 6, 2017, he was served with a Notice to Appear and Complaint for Violation of Probation for his failure to complete the restitution payments. See id. at ¶ 36. Snaider argued that the debt on which the restitution was based had been previously discharged in bankruptcy. See id. at ¶ 37. The state court terminated Snaider's probation upon payment of $2, 000 for reimbursement to CSF and entered a Restitution Order of $536, 000, payable to CSF, on April 20, 2017. See id. at ¶ 38.

         DAS sent Snaider a letter demanding payment of the $536, 000 restitution on May 10, 2017. See id. at ¶ 39. ACT then sent Snaider a letter demanding payment of the $536, 000 restitution on June 30, 2017. See id. at ¶ 40. ACT also made phone calls to Snaider demanding payment of the restitution. See id. at ¶ 41.

         In the Amended Complaint, Snaider asserts two claims. Count One alleges that the three defendants violated the discharge injunction of the bankruptcy court by attempting to collect the restitution amount, which Snaider argues was discharged in bankruptcy. See id. at ¶¶ 43-49. Count Two alleges that the state court's Restitution Order on April 20, 2017, is unenforceable because it is enjoined by the discharge injunction. See id. at ¶¶ 50-51. Both Counts appear to be based on section 524 of title 11 of the United States Code. See id. at ¶¶ 44, 48, 51. Snaider seeks relief in the form of a declaratory judgment that the Restitution Order is void and unenforceable, an injunction enjoining the defendants from attempting to collect payment from him, and civil contempt, costs, and fees pursuant to section 105(a) of title 11 of the United States Code.[3] See id. at 7.

         III. LEGAL STANDARD

         A. Lack of Subject Matter Jurisdiction - Rule 12(b)(1)

         Under Federal Rule of Civil Procedure 12(b)(1), “[a] case is properly dismissed for lack of subject matter jurisdiction . . . when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The plaintiff bears the burden of proving the existence of subject matter jurisdiction by a preponderance of the evidence. Id.

         B. Failure to State a ...


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