Manning v. Feltman
Manning v. Feltman
Opinion of the Court
Opinion
The plaintiff in this foreclosure action, Sidney F. Manning, appeals from the judgment of dismissal rendered by the trial court in favor of the defendants Georges El-Achkar and Homeowners Finance
The following undisputed facts and procedural history are relevant to this appeal. On January 31, 2012, the plaintiff filed this foreclosure action. In his complaint, he alleged that by a mortgage note dated January 9, 1987, Jeffrey L. Feltman, Gary Bengston, Ricky L. Bengston, Ronald O. Price, and Theresa A. Price
On May 9, 2012, El-Achkar filed an answer, five special defenses, and a counterclaim to the plaintiffs complaint. The counterclaim sought to quiet title to the property at 221 Phoenix Street in Vernon. On August 21, 2012, the plaintiff filed an answer and special defenses to El-Achkar’s counterclaim and a reply to his special defenses. El-Achkar filed a reply to the plaintiffs special defenses on October 1,2012. Homeowners filed an answer and five special defenses identical to those of El-Achkar on October 24, 2012.
On January 29, 2013, the defendants jointly filed a motion to dismiss. Their motion claimed that the court lacked subject matter jurisdiction due to the plaintiffs lack of standing because the mortgage and note remain assets of the plaintiffs chapter 7 bankruptcy estate as a result of the plaintiffs failure to list the note and mortgage as an asset in his bankruptcy petition. The plaintiff filed an objection to the motion on February 19, 2013. In his objection, the plaintiff stated: “In 1995,
On February 19, 2013, the court, Sferrazza, J., issued a decision granting the defendants’ motion to dismiss.
“When the plaintiff went into bankruptcy, all of [his] assets, including a property interest in a [chose in] action became the property of the bankruptcy [estate] .... And if a debtor fails to list a claim including a [chose in] action, as an asset when he files [for] bankruptcy relief, that asset remains a part of the bankruptcy estate when the case is closed by virtue of [11 U.S.C. § 554 (d) (2012)]. And a debtor who fails to list a claim cannot pursue the claim for his own benefit unless the trustee has abandoned it. . . . So, consequently, the plaintiff in this case lacks standing to [foreclose] this mortgage.” (Citation omitted; footnote added.) This appeal followed.
“The standard of review for a court’s decision on a motion to dismiss [under Practice Book § 10-31 (a) (1)]
“A motion to dismiss tests . . . whether, on the face of the record, the court is without jurisdiction.” (Internal quotation marks omitted.) Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006). “A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.” (Internal quotation marks omitted.) Caruso v. Bridgeport, 285 Conn. 618, 627, 941 A.2d 266 (2008).
“Any claim of lack of jurisdiction over the subject matter cannot be waived; and whenever it is found after suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the judicial authority shall dismiss the action.” Practice Book § 10-33. Once the issue of subject matter jurisdiction has been raised, the court must resolve it prior to proceeding further with the case. See Figueroa v. C & S Ball Bearing, 237 Conn. 1, 4, 675 A.2d 845 (1996). “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 further step in the cause; as any movement is necessarily the exercise of jurisdiction.” (Internal quotation marks omitted.) Baldwin Piano & Organ Co. v. Blake, 186 Conn. 295, 297, 441 A.2d 183 (1982).
“If a party is found to lack standing, the court is without subject matter jurisdiction to hear the cause. . . . Because standing implicates the court’s subject matter jurisdiction, the plaintiff ultimately bears the burden of establishing standing. . . . Furthermore, [a] trial court’s determination that it lacks subject matter jurisdiction because of a plaintiffs lack of standing is a conclusion of law that is subject to plenary review
I
The plaintiffs first claim is that the court, rather than dismissing his foreclosure complaint, should have “abstained” from deciding federal bankruptcy law issues and referred such issues to the Bankruptcy Court where the plaintiffs case was pending in 1995. The plaintiff does not dispute that when he filed for chapter 7 bankruptcy in 1995, on the advice of his bankruptcy counsel, he never listed the note or mortgage as assets. It is the plaintiffs undisputed failure to schedule the mortgage as an asset when he filed for bankruptcy that is the crux of the standing issue, because the failure of the plaintiff to list the note and mortgage on his bankruptcy schedules resulted in the subject property remaining the property of the bankruptcy estate rather than the plaintiff.
“The debtor must file a formal statement with the Bankruptcy Court including a schedule of his or her assets and liabilities. See 11 U.S.C. § 521 (a) (1) (B) (i). . . . Property that is scheduled pursuant to 11 U.S.C. § 521 (1), but not administered by the plan, is abandoned to the debtor by operation of law at the close of
Bankruptcy courts have held that unscheduled notes or mortgages remain the property of the bankruptcy estate even after the case is closed. See In re Kane, United States Bankruptcy Court, Docket No. 09-12470, (Bankr. N.D. Cal. July 12,2010) (rejecting debtor’s argument that estate had abandoned note by operation of law when note never properly scheduled so trustee could make knowing and intelligent decision as to whether to administer it); In re Orth, 251 B.R. 333, 334-35 (Bankr. W.D. Mich. 2000) (bankruptcy trustee entitled to proceeds toward satisfaction of note and mortgage granted to debtors upon sale of property when debtors failed to list note and mortgage as assets in their bankruptcy filing); In re Harris, 32 B.R. 125, 126-27 (Bankr. S.D. Fla. 1983) (debtors who filed for bankruptcy but failed to schedule their interest in two mortgages upon belief they lacked appreciable value not entitled to proceeds upon discharge of two mortgages after bankruptcy case concluded; court awarded proceeds to bankruptcy estate).
The plaintiff also does not have standing to pursue causes of action that are the rightful property of a bankruptcy estate. See Channer v. Loan Care Servicing
If the plaintiff lacks standing, the court must dismiss the action; it has no jurisdiction to take any further action, such as ordering a stay of the foreclosure proceeding to seek the advice of the federal bankruptcy court, a procedure for which the plaintiff presents no authority given the fact that his bankruptcy case was closed years ago. The case he does cite, In re Crocker, 362 B.R. 49 (B.A.P. 1st Cir. 2007), is distinguishable from the present case in that it involved a debtor who did file a motion to reopen his bankruptcy case after it had been closed to resolve a question of dischargeability. In his appellate brief, the plaintiff spends considerable time speculating as to the possible consequences of pursuing a motion to reopen his bankruptcy case. He admits in his brief the following: “It is apparent from review of the relevant bankruptcy law concerning motions to reopen a case based upon omitted . . . assets that the bankruptcy court could take, in its discretion, various actions concerning the motion, and different results could obtain, based upon the position of the [bankruptcy] court and the trustee.”
As noted by our Supreme Court, “the integrity of the bankruptcy system depends on full and honest disclosure by debtors of all their assets. The courts will not permit a debtor to obtain relief from the [BJankruptcy [C]ourt by representing that no claims exist and then subsequently to assert those claims for his own benefit in a separate proceeding. The interests of both the creditors, who plan their action in the bankruptcy proceeding on the basis of information supplied in the disclosure
The undisputed facts before the trial court readily support the court’s determination that the plaintiff lacked standing to bring the present action. Accordingly, we conclude that the court properly determined that it lacked subject matter jurisdiction and dismissed the plaintiffs complaint. The plaintiff is unable to demonstrate, in the absence of jurisdiction, that the immediate dismissal of the action was improper or that any further movement by the court was warranted.
II
In his second claim, the plaintiff argues that the defendants lacked standing to raise any “bankruptcy issues” in their motion to dismiss because “[t]he only interest they have at all is that the property that they have an interest in is subject to [the plaintiffs] preexisting mortgage.” This claim is unsupported by reference to any legal authority and warrants only a brief discussion.
Both defendants are alleged in the plaintiffs complaint to have a title or interest in the property that a foreclosure judgment will affect. Any party, or the court itself, can raise the issue of subject matter jurisdiction at any time. It matters not how or by whom the question of jurisdiction is raised. Woodmont Assn. v. Milford, 85 Conn. 517, 524, 84 A. 307 (1912). Because subject matter jurisdiction cannot be conferred by waiver or consent; Samson v. Bergin, 138 Conn. 306, 309, 84 A.2d 273 (1951); the court must address the question, suo motu if necessary, even in the absence of a motion. Felletter v. Thompson, 133 Conn. 277, 280, 50 A.2d 81 (1946). “When standing is put in issue, the question is
Ill
In his third claim, the plaintiff challenges the court’s judgment on the ground that, for the defendants, rather than filing a motion to dismiss, “a more appropriate motion would have been a motion to substitute [a] party plaintiff’ that was selected by the Bankruptcy Court. Like the plaintiffs second claim, this claim is summarily briefed, is unsupported by any authority, and warrants only a brief analysis.
Neither the defendants nor the court were obligated to attempt to establish the plaintiffs standing by seeking to move to substitute a more appropriate plaintiff.
The judgment is affirmed.
In this opinion DiPENTIMA, C. J., concurred.
El-Achkar is the current owner of the property sought to be foreclosed. Homeowners claims an interest in the property by virtue of two mortgages it holds on the property. The other named defendants are Jeffrey L. Feltman (the former owner of the property), Gary Bengston, Ricky L. Bengston, Town and Country Veterinary Associates, P.C., the Department of Revenue Services, the United States Internal Revenue Service, and Ford Motor Credit Company. Connecticut Attorneys Title Insurance Company filed an appearance as an entity with a legal interest in the cause on appeal. Feltman and the Bengstons were signatories on a note promising to pay the plaintiff the sum of $36,000, which was secured by a mortgage from Feltman to the plaintiff. The complaint alleges that all the other defendants hold subsequent interests in the property being foreclosed. None of these other defendants are involved in this appeal. In this opinion, we refer to El-Achkar and Homeowners collectively as the defendants, and individually by name where appropriate.
Ronald O. Price and Theresa A. Price, originally named as defendants, were removed as party defendants from the case.
There is nothing in the record that establishes the plaintiffs assertion that the mortgage had no value at the time he filed for bankruptcy. The record reflects that, at the time of the filing, the plaintiff never presented an accurate determination as to the unpaid balances of the prior liens or the fair market value of the property.
Although the record does not contain a written memorandum of decision or a signed transcript regarding the court’s decision granting the motion to dismiss, the plaintiff has filed an unsigned transcript of the court’s decision. Although Practice Book § 64-1 (a) provides that a transcript of an oral memorandum of decision “shall be signed by the trial judge,” we have deemed the record adequate for review despite the lack of a signature on the transcript where, as here, the unsigned transcript “contains a sufficiently detailed basis for the trial court’s decision.” Thompson Garden West Condominium Assn., Inc. v. Masto, 140 Conn. App. 271, 274 n.2, 59 A.3d 276 (2013). On the last page of the transcript, the court indicated that its ruling “be transcribed under Practice Book § 64-1 for purposes of appeal,” signaling its intention that the transcript constitutes its oral decision in this matter.
On appeal, the plaintiff does not dispute these factual findings by the court.
The plaintiff does not suggest any facts that would excuse his failure to list the note and mortgage on the bankruptcy schedule of assets, such as that his interest in the note and mortgage did not accrue before the close of his bankruptcy estate, that he scheduled the claim on his bankruptcy petition and the trustee failed to administer it before the close of the estate, or that the bankruptcy trustee gave notice to his creditors or held a hearing with regard to the mortgage and the note. See Tilley v. Anixter, Inc., 332 B.R. 501, 507-508 (Bankr. D. Conn. 2005).
Section 554 (d) of title 11 of the United States Code provides: “Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.”
Section 350 (a) of title 11 of the United States Code provides: “After an estate is fully administered and the court has discharged the trustee, the court shall close the case.” Rule 5010 of the Federal Rules of Bankruptcy Procedure provides in relevant part: “A case may be reopened on motion of the debtor or other party in interest pursuant to § 360 (b) of the [Bankruptcy] Code. In a chapter 7 . . . case a trustee shall not be appointed by the United States trustee unless the court determines that a trustee is necessary to protect the interests of creditors and the debtor or to insure efficient administration of the case.” Accordingly, because the plaintiffs bankruptcy case is closed, there is no longer a designated trustee who could be substi
Whether either of the defendants could move to reopen the bankruptcy case is doubtful. Although 11 U.S.C. § 350 (b) provides that “[a] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause,” and Rule 5010 of the Federal Rules of Bankruptcy Procedure gives the debtor or any other party in interest the right to file a motion to reopen, parties who do not fall into the category of debtor or creditor may not have standing to do so. 3 Collier, Bankruptcy (A. Resnick & H. Sommer eds., 16th Ed. 2011) § 350-03 [8], pp. 350-15 through 350-16; see also In re Alpex Computer Corp., 71 F.3d 353, 356-58 (10th Cir. 1995) (corporation allegedly owing money to debtor did not have standing to reopen case, even if corporation might be affected by how trustee interpreted plan as permitting litigation against it).
Practice Book § 9-18 provides: “The judicial authority may determine the controversy as between the parties before it, if it can do so without prejudice to the right of others; but, if a complete determination cannot be had without the presence of other parties, the judicial authority may direct that they be brought in. If a person not a party has an interest or title which the judgment will affect, the judicial authority, on its motion, shall direct that person to be made a party.”
We assume that, in pursuing the motion to dismiss, El-Achkar duly considered the effect, if any, that the lack of a decision from the Bankruptcy Court or trustee may have on the pursuit of his counterclaim to quiet title to the subject property.
Concurring Opinion
concurring. I agree with the reasoning of the majority opinion and its holding, namely, that the plaintiff, Sidney F. Manning, has not established standing to bring this foreclosure action, and, therefore, the trial court had no subject matter jurisdiction to proceed further in the action, even to order the parties to return to the Bankruptcy Court to resolve the question of the ownership of the mortgage in question. I write briefly and separately, however, to underscore the anomalous and economically wasteful posture in which this leaves the property in question.
As a result of this conclusion, the property in question is, insofar as the real estate records are concerned,
Thus, it behooves all of the parties to hie themselves to the Bankruptcy Court. There they should implore the court to reopen the bankruptcy case so as either to lodge ownership of the mortgage in the trustee (or a duly appointed successor trustee), or to permit that trustee to abandon any interest in the mortgage, which should have the effect of lodging ownership of the mortgage in the plaintiff. Otherwise, the property in question will remain indefinitely a piece of real estate without capability of liquidation. This is hardly a state of affairs that commands respect.
See footnote 1 of the majority opinion.
Reference
- Full Case Name
- Sidney F. Manning v. Jeffrey L. Feltman Et Al.
- Cited By
- 11 cases
- Status
- Published