96104 APARTMENTS, LLC v. Alan M. FISCHER.

2006 Ct. Sup. 20792
No. HHB CV06 4010079 SConnecticut Superior Court, Judicial District of New Britain at New Britain.
November 7, 2006.

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

ROBERT B. SHAPIRO, Judge of the Superior Court.

MEMORANDUM OF DECISION ON APPLICATION FOR DISCHARGE OF BROKER’S LIEN
On September 11, 2006, the court held a hearing concerning 96104 Apartments, LLC’s (applicant) application for discharge of commercial real estate property claim for lien pursuant to General Statute § 20-325e,[1] dated July 11, 2006. The court heard the testimony of witnesses and received various exhibits in evidence. Thereafter, in lieu of oral argument, and pursuant to a briefing schedule, the parties’ presented post-hearing memoranda of law, the last of which was dated October 2, 2006.

In its application, the applicant asserts that it owns real estate located at 96-104 Clinic Drive, in New Britain, Connecticut (the property). It states that, on or about September 10, 2003, the respondent, Alan M. Fischer, placed a claim for lien on the property, but did not give notice thereof. See Broker’s Lien, Exhibit B to application.

The applicant claims that there is no probable cause to sustain the validity of the lien. Among the reasons stated in its application are that: (1) pursuant to General Statute § 20-325a(i), the lien is void since it was not recorded within thirty days after the property was conveyed to the applicant; (2) service of the lien was not made on the owner, as required by General Statute § 20-325a(j); (3) as provided in General Statute § 20-325a(k), the lien is extinguished since foreclosure was not commenced within one year after the lien was recorded; and (4) no written notice of the claim for lien was served on the owner as required by General Statute § 20-325a(r). The applicant also sets forth other grounds, contending that the listing agreement at issue was not signed by the owner or by a person who was authorized to bind it, that the requirements of General Statutes § 20-325a(b)(1) through (7) have not been met, and that any money claimed to be due is due only when the applicant sells the property, which has not been sold. CT Page 20793 Under Section 20-325e, the court must determine whether “there is . . . probable cause to sustain the validity” of the lien. The court’s determination as to whether there is probable cause is thus similar to that which is required where an applicant seeks to discharge a mechanic’s lien under General Statute § 49-35b(a),[2] where nearly identical language appears. In that context, our Appellate Court has stated, “[t]he probable cause standard embodied in the statute is analogous to that provided in the statutory provisions relating to prejudgment remedies. See General Statutes 52-278a et seq. Cases which have interpreted this standard as it relates to such remedies are instructive in the present matter as no definition, either statutory or by case law, has been formulated for a probable cause standard under the mechanic’s lien statute.” Pero Building Co. v. Smith, 6 Conn.App. 180, 182, 504 A.2d 524 (1986).

“The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a [person] of ordinary caution, prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false . . .” (Emphasis in original; internal quotation marks omitted.) Benton v. Simpson, 78 Conn.App. 746, 752, 829 A.2d 68 (2003).

“[T]he probable cause hearing is not a full-scale trial on the merits . . . The court’s role in such a hearing is to determine probable success by weighing probabilities . . . [T]his weighing process applies to both legal and factual issues . . .” (Internal quotation marks omitted.) Doe v. Rapoport, 80 Conn.App. 111, 116-17, 833 A.2d 926
(2003). The determination is to be based on the court’s assessment of the legal issues and the credibility of the witnesses. See Nash v. Weed Duryea Co., 236 Conn. 746, 749, 674 A.2d 849 (1996).

General Statute § 20-325a(e) provides, “A licensed real estate broker who has performed acts or rendered services relating to real property upon terms provided for in a written contract or agreement between the broker and the owner or buyer for whom such acts were done or services rendered shall have a lien upon such real property. The lien shall be in the amount of the compensation agreed upon by the broker and the owner or buyer for whom such acts were performed or services rendered.” The validity of such a lien depends on whether the lien or has met the requirements which are also enumerated in other subparagraphs of §20-325a. Here, the record before the court shows that certain of those requirements were not met by the respondent. CT Page 20794 Under General Statute § 20-325a(i),[3] a lien or is required to file his or her lien with the town clerk of the town where the property is located, no later than thirty days after the acceptance of the conveyance or lease which triggers the broker’s right to the claimed commission. Here, according to the applicant’s Exhibit 1, a warranty deed, it acquired the property by conveyance which was recorded on August 12, 2002. The lien was recorded on September 10, 2003, well more than thirty days later. See applicant’s Exhibit 3.

General Statute § 20-325a(j)[4] requires service of the claim for lien on the owner. At the hearing, Leopold Stein, the applicant’s manager, testified that he did not recall receiving any lien. Both Fischer and Cynthia Tsokalas, an employee of Alan Fischer Real Estate, also testified at the hearing. Neither provided any evidence showing that the owner had been served with the lien. Clearly, the record before the court is devoid of any showing that the respondent served the owner, as required by § 20-325a(j).

Similarly, General Statute § 20-325a(r)[5] requires the broker to give written notice of the claim for lien to the owner that the broker intends to claim a lien on the real property, “not later than three days prior to the later of the date of the conveyance or lease as set forth in the real estate sales contract or lease or the actual date of the conveyance or the date when the tenant takes possession . . .” In his testimony, Fischer confirmed that this did not occur.

General Statute § 20-325a(k)(2) provides, “[a] person claiming a lien shall, unless the claim is based upon an option to purchase the real property, within one year after recording the claim for lien, commence foreclosure by filing a complaint. Failure to commence foreclosure within one year after recording the lien shall extinguish the lien. No subsequent claim for lien may be given for the same claim nor may that claim be asserted in any proceedings under this section.” The lien here does not involve an option to purchase the property. The lien was recorded on September 10, 2003. In his hearing testimony, Fischer stated that no foreclosure proceeding has been commenced. Thus, by operation of law, pursuant to § 20-325a(k)(2), the lien is extinguished. See H.G. Bass Associates, Inc. v. Ethan Allen, Inc., 26 Conn.App. 426, 432, 601 A.2d 1040 (1992) (under similar statute concerning mechanic’s liens, General Statute § 49-39, lien became invalid and was discharged as a matter of law one year after recording in the absence of a properly recorded lis pendens).

In his post-hearing memorandum of law, the respondent does not contest the facts which are discussed above. Rather, he argues that the CT Page 20795 applicant’s contentions that the respondent failed to comply with §20-325(j)(k), and (r) are defeated by a requirement that the applicant demand release of the lien from the broker, which is allegedly set forth elsewhere in § 20-325a, in subsections (m) and (o).[6] The respondent contends that the court is without jurisdiction to entertain the application to dissolve the lien. After consideration, the court concludes that this argument is not well founded, since neither subsection requires an owner to make a demand on the broker for a release before proceeding under General Statute § 20-325e.

Section 20-325a(m) provides, “[w]henever a claim for lien has been recorded with the town clerk and a condition occurs that would preclude the broker from receiving compensation under the terms of the broker’s written contract or agreement, the broker shall provide within thirty days of demand to the owner of record a written release or satisfaction of the lien.” The terms of this provision do not require the owner of record to make a demand on the broker for a release of the lien before proceeding to seek discharge of the lien in court.

Similarly, no such demand is required by Section 20-325a(o), which provides, “[w]henever a claim for lien has been recorded with the town clerk and is paid, or where there is failure to foreclose to enforce the lien within the time provided by this section, the broker shall acknowledge satisfaction or release the claim for lien, in writing, on written demand of the owner within thirty days after payment or expiration of the time in which to commence foreclosure on the lien.” Rather, in response to a written demand, this subsection simply requires a lienor whose claim has been paid to provide a satisfaction, or one whose lien has not been foreclosed in a timely manner to release the claim for lien.

Thus, subsections (m) and (o) provide for lienors to release their liens under certain circumstances where a demand for the same has been made. However, Section 20-325e does not make the presentation of a demand a prerequisite for seeking relief from the court. Rather, as set forth above, it states that “[w]henever one or more real property claims for liens are placed upon any real estate pursuant to section 20-325a, the owner of the real estate, if no action to foreclose the claim is then pending before any court, may make application . . . to the superior court . . . that a hearing or hearings be held to determine whether the claim for lien or liens should be discharged or reduced.” (Emphasis added.) Also, in view of the plain language used, under conventional rules of statutory construction, the term “may” confers discretion. See Seals v. Hickey, 186 Conn. 337, 345, 441 A.2d 604 (1982) (“‘may’ mean[s] ‘may.'”). CT Page 20796

Also unpersuasive is the respondent’s argument that General Statute § 49-51[7] precludes the relief sought here. Section 49-51 provides that “[a]ny person having an interest in any real or personal property described in any certificate of lien, which lien is invalid but not discharged of record, may give written notice to the lienor . . . to discharge the lien . . . If the lien is not discharged within thirty days of the notice, that person may apply to the Superior Court for such a discharge . . .” (Emphasis added.) The applicant here is not proceeding under § 49-51. Its application is brought under General Statute § 20-325e, discussed above.

The court is unpersuaded by the respondent’s contention that § 49-51 has been interpreted to apply to all liens against real property, making its notice requirement applicable to proceedings in which the applicant does not rely on § 49-51. Our legislature has not so provided. Rather, the decisions of our Supreme Court cited by the respondent involved situations where litigants chose to proceed under § 49-51 and, therefore, had to meet its notice requirement. In Woronecki v. Trappe, 228 Conn. 574, 637 A.2d 783 (1994), where the defendant’s counterclaim sought the discharge of a mechanic’s lien pursuant to § 49-51, see id., 228 Conn. 576, the court stated that “the defendant, as the moving party, had the burden of proving compliance with the statutory notice requirement.” Id., 228 Conn. 580. Likewise, i Guilford Yacht Club Association, Inc. v. Northeast Dredging, Inc., 192 Conn. 10, 468 A.2d 1235 (1984), the plaintiff brought suit pursuant to § 49-51 to discharge two judgment liens; the court stated that the plaintiff, as the moving party, had the burden of establishing compliance with the statutory notice requirement. See id., 192 Conn. 13. Neither Woronecki v. Trappe, supra, nor Guilford Yacht Club Association, Inc. v. Northeast Dredging, Inc., supra, states that § 49-51’s notice requirement has been engrafted onto and applies to other avenues of statutory relief which may be available to a litigant, such as General Statute § 20-325e.

In Justin Development Corp. v. Donald J. Colasono Associates, P.C., 31 Conn.Sup. 209, 326 A.2d 836 (1974), also cited by the respondent, the plaintiff sought a summary order discharging a mechanic’s lien and appealed to the court’s equity jurisdiction for the relief sought. See id., 31 Conn.Sup. 210. In the absence of specific statutory authority, the court declined the request, noting that General Statutes §§ 49-37 and 49-51 were available to the plaintiff to seek a dissolution or discharge of the lien. See id., 31 Conn.Sup. 211. Thus, the court stated that the plaintiff could utilize either statutory avenue, not that § 49-51’s notice requirement was applicable to CT Page 20797 proceedings under both statutes.

Also, respondent’s contention that § 49-51, in effect, preempts §20-325e, is contrary to the “basic tenet of statutory construction that the legislature [does] not intend to enact meaningless provisions . . . [I]n construing statutes, we presume that there is a purpose behind every sentence, clause, or phrase used in an act and that no part of a statute is superfluous.” (Internal quotation marks omitted.)Echevarria v. National Grange Mutual Insurance Co., 275 Conn. 408, 415, 880 A.2d 882 (2005).

Finally, and in the alternative, the respondent argues that if the court finds, pursuant to General Statute § 20-325a(k) or (n)[8] that the lien is discharged as a matter of law, the court is without jurisdiction since no practical relief can be provided where the lien no longer exists. See respondent’s post-hearing memorandum of law, p. 6.

“Subject matter jurisdiction involves the authority of a court to adjudicate the type of controversy presented by the action before it . . . A court does not truly lack subject matter jurisdiction if it has competence to entertain the action before it . . . Once it is determined that a tribunal has authority or competence to decide the class of cases to which the action belongs, the issue of subject matter jurisdiction is resolved in favor of entertaining the action.” (Citations omitted; internal quotation marks omitted.) Amodio v. Amodio, 247 Conn. 724, 727-28, 724 A.2d 1084 (1999).

The court has subject matter jurisdiction to determine whether a lien is valid. The procedure set forth in General Statute § 20-325e is analogous to that set forth under General Statute § 49-35a, concerning an application for reduction or discharge of a mechanic’s lien. Se New England Savings Bank v. Meadow Lakes Realty Co., 235 Conn. 663, 669-70, 668 A.2d 712 (1996).

The practical relief to be provided here would be the clearing of a cloud on title. The respondent’s final argument ignores the fact that, taken to its logical extension, it would result in the lien remaining on the land records even though, as a matter of law, it was extinguished. In such circumstances, an owner would be left with a cloud on its title and have no means, short of its adversary’s consent to release the lien, of clearing the title. This would be an absurd result, not intended by the legislature, which cannot be countenanced by the court. Se State v. Haight, 279 Conn. 546, 550, 903 A.2d 217 (2006).

Section 20-325e and other statutory methods of clearing title exist to CT Page 20798 prevent such results. The purpose of such statutes is to provide a means by which an invalid lien ceases to be “a cloud on the title . . .”Lichtman v. Beni, 280 Conn. 25, 35, 905 A.2d 647 (2006) (concerning General Statute § 49-35c).

In view of the court’s determination, for the reasons stated above, that there is no probable cause to sustain the validity of the lien, there is no need for the court to consider the other grounds stated in the application. Also, the court declines the applicant’s request, set forth in its memorandum, that the court declare that no money is due from the applicant to the respondent. As the applicant concedes, this proceeding concerns only its application to discharge the lien. “The principle that a plaintiff may rely only upon what he has alleged is basic . . . It is fundamental in our law that the right of a plaintiff to recover is limited to the allegations of his complaint . . .”Lebron v. Commissioner of Correction, 274 Conn. 507, 519, 876 A.2d 1178
(2005). The court may not adjudicate issues which were not part of the pleadings.

CONCLUSION
For the foregoing reasons, since there is no probable cause to sustain the validity of the lien, the application for discharge of the lien is granted.

[1] Section 20-325e provides, in pertinent part, “(a) Whenever one or more real property claims for liens are placed upon any real estate pursuant to section 20-325a, the owner of the real estate, if no action to foreclose the claim is then pending before any court, may make application, together with a proposed order and summons, to the superior court for the judicial district in which the lien may be foreclosed under the provisions of section 20-325a or to any judge thereof, that a hearing or hearings be held to determine whether the claim for lien or liens should be discharged or reduced.”

Subsection (b) thereof provides that an applicant must represent either that “there is not probable cause to sustain the validity of such claim for lien . . . or: That such claim for lien is excessive . . .”

[2] Section 49-35b(a) provides, in part, “Upon the hearing held on the application or motion set forth in section 49-35a, the lienor shall first be required to establish that there is probable cause to sustain the validity of his lien.”
[3] Section 20-325a(i) provides, “If a broker’s written contract for CT Page 20799 payment is with a prospective buyer, then the lien shall attach only after the prospective buyer accepts the conveyance or lease of the real property and the claim for lien is recorded by the broker with the town clerk of the town in which the property is located. Any claim for lien shall be filed by the broker no later than thirty days after the conveyance or the tenant takes possession of the real property.”
[4] Section 20-325a(j) states, “The broker shall serve a copy of the claim for lien on the owner of the real property. Service shall be made by mailing a copy of the claim for lien by registered or certified mail, return receipt requested, or by personal service upon the owner by any indifferent person, state marshal or other proper officer, by leaving with such owner or at the owner’s usual place of abode a true and attested copy thereof . . . A copy of the claim for lien may be served at the same time as the notice required by subsection (r) of this section. The broker’s lien shall be void and unenforceable if recording does not occur within the time period and in the manner required by this section.”
[5] General Statute § 20-325a(r) provides, in pertinent part, “No broker is entitled to claim any lien under this section unless (1) after the broker is entitled to compensation, without contingencies other than closing or transfer of title, under the terms set forth in the written contract and not later than three days prior to the later of the date of the conveyance or lease as set forth in the real estate sales contract or lease or the actual date of the conveyance or the date when the tenant takes possession, the broker gives written notice of the claim for lien to the owner of the real property and to the prospective buyer or tenant that the broker is entitled to compensation under the terms set forth in the written contract and intends to claim a lien on the real property, or (2) the broker is unable to give written notice pursuant to subdivision (1) of this subsection because the identity of the prospective buyer or tenant cannot be ascertained by the broker after due diligence and reasonable effort.”
[6] The respondent’s memorandum does not address the applicant’s contention as to the respondent’s failure to meet Section 20-325a(i)’s requirement, which is discussed above, that the lien must be recorded within thirty days of the conveyance.
[7] Section 49-51(a) provides, in pertinent part, “Any person having an interest in any real or personal property described in any certificate of lien, which lien is invalid but not discharged of record, may give written notice to the lienor sent to him at his last-known address by registered mail or by certified mail, postage prepaid, return CT Page 20800 receipt requested, to discharge the lien. Upon receipt of such notice, the lienor shall discharge the lien by sending a release sufficient under section 52-380d, by first class mail, postage prepaid, to the person requesting the discharge. If the lien is not discharged within thirty days of the notice, that person may apply to the Superior Court for such a discharge, and the court may adjudge the validity or invalidity of the lien and may award the plaintiff damages for the failure of the defendant to make discharge upon request.”
[8] Section 20-325(n) provides, in pertinent part, “Upon written demand of the owner or the owner’s authorized agent, served on the broker claiming the lien requiring suit to be commenced to enforce the lien, a suit shall be commenced within forty-five days thereafter or the claim for lien shall be extinguished.”

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