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ION Bank v. J.C.C. Custom Homes, LLC

Court of Appeals of Connecticut

April 2, 2019


          Argued December 6, 2018

         Procedural History

         Action in replevin to recover certain chattel in the defendants' possession, and for other relief, brought to the Superior Court in the judicial district of Waterbury, where the court, Brazzel-Massaro, J., granted the defendants' motion to dismiss and rendered judgment thereon, from which the plaintiff appealed to this court. Affirmed.

          Christopher R. LaSaracina, for the appellant (plaintiff).

          John J. Ribas, for the appellees (defendants).

          DiPentima, C. J., and Prescott and Elgo, Js.


          PRESCOTT, J.

         In this replevin action, the plaintiff, Ion Bank, appeals from the judgment of the trial court granting a motion to dismiss filed by the defendants, J.C.C. Custom Homes, LLC (J.C.C.), Rock On Excavation Services, LLC (Rock On), John C. Ciappetta, and Dawn E. Ciappetta. The court concluded that the plaintiff lacked standing to bring the action because, prior to commencing it, the plaintiff had assigned its interest in the underlying promissory note to Nutmeg Financial Holdings, LLC (Nutmeg), and, therefore, the court lacked subject matter jurisdiction.

         The plaintiff concedes that the action was commenced in the name of the wrong party. Nevertheless, the plaintiff claims on appeal that the court improperly granted the motion to dismiss because it (1) failed to consider an amended complaint that the plaintiff filed pursuant to Practice Book § 10-59, which, the plaintiff argues, substituted Nutmeg in as the proper plaintiff by operation of law and, thus, cured any defect regarding standing, (2) concluded that the plaintiff was required to file a motion for permission to substitute in a new plaintiff and failed to treat the amended complaint as a motion to substitute, and (3) failed to conclude that Nutmeg, as the assignee of the note, is entitled to maintain an action either in its own name or in the name of its assignor, the plaintiff. We are not persuaded by the plaintiff's arguments and, accordingly, affirm the judgment of the court.

         The following facts, as set forth by the trial court in its memorandum of decision or taken from the complaint and viewed in the light most favorable to the plaintiff, are relevant to our resolution of the present appeal. J.C.C., through it owners, John C. Ciappetta and Dawn E. Ciappetta, executed a commercial promissory note in favor of the plaintiff on December 29, 2010, in the principal amount of $170, 000. J.C.C. agreed to repay the loan along with interest and any applicable late charges by January 1, 2016. J.C.C. also executed a commercial security agreement in which it pledged a 2004 Ford F350 pickup truck as collateral for the loan. As additional security for the note, Rock On, a limited liability company also owned by the Ciappettas, executed commercial security agreements providing as collateral a 1981 Kenworth W900 truck, a 1989 East Dump trailer, and a 1998 Caterpillar 416 backhoe. Rock On, John C. Ciappetta, and Dawn E. Ciappetta also executed guarantees assuming liability for repayment of the note.

         J.C.C. failed to make the required monthly loan payments and defaulted on the note. Despite demands by the plaintiff for repayment, the defendants did not repay the loan or make the collateral available to the plaintiff.

         On June 30, 2016, the plaintiff assigned all of its interest in the note to Nutmeg.[1] Despite the assignment, the plaintiff, on July 1, 2016, initiated the underlying replevin action against the defendants by service of process.[2] In addition to a prejudgment writ of replevin expressly identifying the plaintiff as the party entitled to immediate possession of the collateral, the process included the requisite affidavit and bond. See General Statutes § 52-518. The return date on the writ was August 9, 2016.

         On August 17, 2016, the plaintiff filed a pleading titled ‘‘Plaintiff's Amended Complaint, '' attached to which was an amended prejudgment writ of replevin substituting Nutmeg as the named plaintiff. The amended complaint stated in relevant part: ‘‘Pursuant to Practice Book §§ 9-16[3] and 10-59, [4] the plaintiff hereby amends its complaint as of right to amend, among other things, the named plaintiff. The proper plaintiff, [Nutmeg], has acquired the right to collect the debt due, as evidenced by the allonge to the promissory note as alleged in the complaint. Said note is secured by, among other things, the guarantees and security agreements as described in the complaint, and said guarantees and security agreements have been assigned to [Nutmeg] as well. Accordingly, [Nutmeg] is now the proper plaintiff and should be substituted as the sole plaintiff in this action.'' (Footnotes added.)

         On October 14, 2016, the defendants filed a motion to dismiss the action for lack of subject matter jurisdiction. According to the defendants, because the plaintiff assigned the note to Nutmeg prior to commencing the replevin action, it lacked a legal interest in the items it sought to replevy and, thus, lacked standing to commence or maintain the action. The defendants further argued that the plaintiff's attempt to substitute in Nutmeg as the real plaintiff in interest by filing an amended complaint was improper and did not ‘‘accomplish the desired substitution.''[5]

         The plaintiff filed an objection to the motion to dismiss. The plaintiff argued with respect to the issue of standing that (1) Nutmeg was substituted in as the real plaintiff in interest by virtue of the amended complaint it filed pursuant to Practice Book § 10-59, (2) even if it was not entitled to substitute in Nutmeg as a matter of right, the court should treat the amended complaint as a motion to substitute pursuant to General Statutes § 52-109, and (3) it was entitled to maintain the action in its own name despite the assignment of the note to Nutmeg.

         The court, Brazzel-Massaro, J., heard argument on the motion to dismiss on December 5, 2016. On March 20, 2017, the court rendered a decision granting the motion to dismiss, concluding that, because the plaintiff lacked standing at the time it commenced the replevin action, the court lacked subject matter jurisdiction over the matter ab initio. The court rejected the plaintiff's argument that, as the assignor of the note to Nutmeg, it had standing to maintain the action on behalf of its assignee. The court reasoned that, in the present case, the plaintiff ‘‘[had given] up all of its rights, title, and interest in the note to Nutmeg on June 30, 2016, and did not have standing to commence suit itself.'' The court further rejected the plaintiff's argument that it had effectuated a substitution of Nutmeg as the plaintiff by virtue of its amended complaint. The court held that, pursuant to § 52-109, substitution of a plaintiff could only be effectuated if the court determined pursuant to a motion for substitution that the action had been ‘‘commenced in the name of the wrong plaintiff through mistake.'' (Internal quotation marks omitted.) The plaintiff, however, had never filed a proper motion with the court. The plaintiff filed a timely motion to reargue the court's granting of the motion to dismiss, which the court subsequently denied. This appeal followed.

         We begin with general principles of law, including our standard of review. ‘‘Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy. . . . [If] a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.'' (Citation omitted; internal quotation marks omitted.) J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 318, 71 A.3d 492 (2013).

         ‘‘[B]ecause the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss. . . . The standard of review for a court's decision on a motion to dismiss is well settled. A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction. . . . [O]ur review of the court's ultimate legal conclusion and resulting [determination] of the motion to dismiss will be de novo. . . . When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light. . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader. . . . The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone. . . . [I]t is the burden of the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of ...

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