Bennett v. Shaheer

Teresa BENNETT v. Jihad SHAHEER

No. FBTCV126030297S

Superior Court of Connecticut, Judicial District of Fairfield, Bridgeport

February 1, 2019

UNPUBLISHED OPINION

OPINION

BELLIS, J.

Teresa Bennett, the plaintiff and counterclaim defendant, commenced the present case in September of 2012 against U.S. Asset Realty, LLC (US Asset), the defendant and counterclaim plaintiff, as well as Jihad Shaheer. U.S. Asset filed its second amended answer and counterclaim (# 152) on April 15 2013, asserting five counterclaims: breach of fiduciary duty breach of duty of loyalty, replevin, civil theft, and violation of the Connecticut Unfair Trade Practices Act.

On November 14, 2018, Bennett filed a motion to dismiss (# 221) the counterclaims filed against her by U.S. Asset. U.S. Asset filed its objection to the motion to dismiss (# 222) on December 17, 2018, the same date that the parties were heard at short calendar.

DISCUSSION

"[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.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). "A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). "A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).

"[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 the dispute ... It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Financial Consulting, LLC v. Commissioner of Insurance, 315 Conn. 196, 226, 105 A.3d 210 (2015). "Trial courts addressing motions to dismiss for lack of subject matter jurisdiction pursuant to § 10-31(a)(1) may encounter different situations, depending on the status of the record in the case ... [L]ack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts ... Different rules and procedures will apply, depending on the state of the record at the time the motion is filed." (Citation omitted; footnote omitted; internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 650-51, 974 A.2d 669 (2009).

In support of her motion to dismiss, Bennett argues that her discharge in bankruptcy extinguished U.S. Asset’s claims and, accordingly, that this court lacks subject matter jurisdiction. In response, U.S. Asset argues that its claims against Bennett were not extinguished. Specifically, U.S. Asset contends that because it was not listed as a creditor, it did not receive notice of Bennett’s bankruptcy action; therefore, U.S. Asset argues, the debt was not discharged. In the alternative, U.S. Asset argues that pursuant to 11 U.S.C. § 523(a)(4) and (6), ^[1] its claims against Bennett remain viable. Finally, U.S. Asset notes that it filed a motion to open the bankruptcy case and requests that this court stay the present case until the bankruptcy court resolves that motion.

As a threshold matter, "[f]ederal preemption implicates the court’s jurisdiction." Lewis v. Chelsea G.C.A. Realty Partnership, L.P., 86 Conn.App. 596, 601, 862 A.2d 368 (2004), cert. denied, 273 Conn. 909, 870 A.2d 1079 (2005). "Congress has given The United States district courts original and exclusive jurisdiction over bankruptcy matters arising under title 11 of the United States Code. 28 U.S.C. § 1334(a). Through the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., Congress has provided a comprehensive federal system of penalties and protection to govern the orderly conduct of debtors’ affairs and creditors’ rights." (Internal quotation marks omitted.) Id., 602. Consequently, "[s]everal Superior Court decisions ... have found a lack of subject matter jurisdiction over pre-petition claims where the plaintiff did not file a proof of claim with the Bankruptcy Court." Sniffen v. Santos, Superior Court, judicial district of Waterbury, Docket No. CV- 14-6025264-S (January 29, 2016, Brazzel-Massaro, J.) [61 Conn.L.Rptr. 701]; see also DAB Three, LLC v. LandAmerica Financial Group, Inc., 183 Conn.App. 307, 192 A.3d 510, cert. denied, 330 Conn. 921, 194 A.3d 289 (2018) (affirming trial court determination that discharge in bankruptcy deprived court of subject matter jurisdiction).^[2]

Next, "Chapter 13 of the [Bankruptcy] Code [permits] an insolvent individual to discharge certain unpaid debts ... Chapter 13 authorizes an individual with regular income to obtain a discharge after the successful completion of a payment plan approved by the bankruptcy court." Marrama v. Citizens Bank, 549 U.S. 365, 367, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007). "As it applies in Chapter 13, the code provides that ‘the court shall grant the debtor a discharge of all debts ... 11 U.S.C. § 1328(a) ... [U]nder 11 U.S.C. § 524(a)(2), a Chapter 13 discharge operates as ‘an injunction against the commencement or continuation of an action ... to collect ... any such debt as a personal liability of the debtor ...’" In re Smith, 514 B.R. 331, 339 (Bankr. S.D.Ga. 2014).

Nevertheless, 11 U.S.C. § 523 provides for certain exceptions to discharge. With regard to U.S. Asset’s first argument, "[q]uestions about the dischargeability of unlisted pre-petition debts typically arise in the context of a state court collection action. State courts have concurrent jurisdiction with the bankruptcy courts under § § 523(a)(3)(A) or (B) to determine whether an unscheduled debt was discharged in the debtor’s bankruptcy proceeding." In re Dunhill, Ch. 7 Case No. 11-12052 HRT (Colo. July 11, 2012); see also In re McGhan, 288 F.3d 1172, 1176 (9th Cir. 2002) ("state and federal courts have concurrent jurisdiction over § 523[a][3] [unlisted or unscheduled debt] proceedings"). Pursuant to § § 523(a)(3)(A) and (B), ^[3] if a debtor fails to list a creditor or schedule the creditor’s claim in time for that creditor to file with the bankruptcy court, the debt is not discharged unless the creditor had notice or actual knowledge of the bankruptcy. Accordingly, listing a claim in a petition for bankruptcy "is prerequisite to securing a discharge of the claim by bankruptcy proceedings unless it can be shown that the creditor had notice or actual knowledge of the proceedings in bankruptcy ." (Emphasis added.) Jenkins v. Bishop Apartments, Inc., 144 Conn. 389, 392-93, 132 A.2d 573 (1957).

In the present case, the record before this court demonstrates that U.S. Asset had notice and actual knowledge of the bankruptcy. Shaheer has attested (# 169) that he is the 51 percent asset holder of U.S. Asset. On April 28, 2015, Bennett filed a petition for Chapter 13 bankruptcy; a notice of bankruptcy was filed with this court on that same date (# 192). Andre Cayo, as Shaheer’s attorney, filed an affidavit on March 28, 2016, (# 194) attesting that "I am familiar with the status of [Bennett’s] bankruptcy case because I am representing a creditor in the bankruptcy case ..." Cayo filed an appearance on behalf of U.S. Asset at the outset of the present case and currently represents U.S. Asset. U.S. Asset was not listed as a creditor and did not file a proof of claim in the bankruptcy case. Shaheer and Cayo were both listed as creditors. Bennett received an Order of Discharge under 11 U.S.C. § 1328(a) from the bankruptcy court on March 1, 2018. On October 15, 2018, Attorney Cayo filed a "declaration of no bankruptcy" (# 200) in which he attested that, as counsel for Shaheer and U.S. Asset, he was familiar with Bennett’s bankruptcy case and that the bankruptcy case had been "discharged and closed."

U.S. Asset’s argument that Bennett’s failure to specifically include it on her list of creditors is sufficient to call into question the dischargeability of the debt is not persuasive. Although Bennet failed to list U.S. Asset as a creditor, Bennett did list U.S. Asset’s 51 percent asset holder, Jihad Shaheer, and its attorney, Andre Cayo, as creditors. Furthermore, notice of Bennett’s bankruptcy action was filed in the present case, to which U.S. Asset is and was a party. Indeed, the bankruptcy conspicuously stayed the present case for a period of years. It is also apparent from the record that U.S. Asset’s 51 percent asset holder and its attorney were well aware of Bennett’s bankruptcy petition and were involved in the disposition of the bankruptcy case. Accordingly, notwithstanding the fact that U.S. Asset was not listed as a creditor, the debt was discharged because U.S. Asset had notice and actual knowledge of the bankruptcy.

With regard to U.S. Asset’s second argument, pursuant to 11 U.S.C § 523(c)(1), ^[4] this court lacks jurisdiction to consider whether the debt was not dischargeable pursuant to § § 523(a)(4) and (6). "State courts of general jurisdiction have the power to decide cases involving federal ... rights where ... neither the Constitution nor statute withdraws such jurisdiction ... Section 523(c) of the [Bankruptcy] Code [which is contained in title 11 of the...