Fairlake Capital, LLC v. Lathouris

214 Conn.App. 750

281 A.3d 1240

FAIRLAKE CAPITAL, LLC

v.Peter LATHOURIS et al.

AC 44622

Appellate Court of Connecticut.

Argued April 14, 2022

Officially released August 30, 2022

Danielle J. B. Edwards, with whom, on the brief, was Peter V. Lathouris, Stamford, for the appellant (defendant Number Six, LLC).

Patrick McCabe, Stamford, with whom, on the brief, was Yan Margolin, pro hac vice, for the appellee (plaintiff).

Bright, C. J., and Prescott, Elgo, Moll, Cradle, Alexander, Suarez, Clark and DiPentima, Js.

BRIGHT, C. J.

The defendant Number Six, LLC (Number Six), appeals from the order of the trial court denying its motion to discharge a notice of lis pendens (motion to discharge) recorded by the plaintiff, Fairlake Capital, LLC.¹ Number Six also appeals from the order of the court denying its motion to lift a discretionary stay in the underlying proceedings to allow it to pursue the motion to discharge. Our disposition of this appeal hinges on two issues that concern the denial of the motion to discharge. First, as a threshold matter implicating our subject matter jurisdiction, we must determine whether the denial of the motion to discharge is

a final judgment for appeal purposes. If we answer that question in the affirmative, the second issue is whether the court abused its discretion by denying the motion to discharge, without holding a hearing and adjudicating the merits of the motion in accordance with General Statutes §§ 52-325a and 52-325b, solely on the procedural ground that the discretionary stay was in place. Number Six claims that the denial of the motion to discharge is a final judgment and that the court improperly denied the motion to discharge on the basis of the discretionary stay. The plaintiff, on the other hand, maintains that (1) no final judgment exists, or, alternatively, (2) the court properly denied the motion to discharge on the basis of the discretionary stay. We conclude that (1) the denial of the motion to discharge is a final judgment for appeal purposes and (2) the court abused its discretion when it relied on the discretionary stay to deny Number Six's motion to discharge.² We further conclude that our resolution of Number Six's claim concerning its motion to discharge necessarily resolves the question of whether the court should have lifted the discretionary stay to permit a hearing on that motion.³

The following facts and procedural history are relevant to our resolution of this appeal. On August 1, 2017,

the plaintiff commenced the present action against Peter Lathouris (Peter), Patricia Spanos Lathouris (Patricia), Continental Mortgage Banking, Ltd. (Continental), and Number Six. The plaintiff's four count complaint asserts claims of fraudulent transfer against the defendants in violation of the Connecticut Uniform Fraudulent Transfer Act (CUFTA), General Statutes § 52-552a et seq., against the defendants.⁴

In support of those claims, the plaintiff alleged the following facts in its complaint.

In April, 2017, the plaintiff commenced an action against Peter and Patricia claiming breach of guaranty and unjust enrichment. See Fairlake Capital, LLC v. Lathouris , Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. X08-CV-17-6031982-S (August 13, 2019) ( 69 Conn. L. Rptr. 168, 2019 WL 4667984 ) (guaranty action), aff'd, 210 Conn. App. 801, 271 A.3d 689, cert. denied, 343 Conn. 928, 281 A.3d 1186 (2022). On May 12, 2017, Peter and Patricia purchased real property located in New Canaan (property) for $1.9 million. That same day, for consideration in the sum of one dollar, Peter and Patricia quitclaimed the property to Number Six, which was formed two days before the sale and which at all relevant times was owned, controlled, or dominated by Peter and/or Patricia. Additionally, on May 12, 2017, Continental, which was formed in 1990 and which is owned, operated, managed, or dominated by Peter and/ or Patricia, extended a mortgage loan to Number Six in the sum of $2.5 million. A portion of the mortgage loan was used to pay the sellers of the property, with Number Six retaining the balance of the funds. As relief, the plaintiff seeks, inter alia, avoidance of the alleged

fraudulent transfer of the property and of the alleged fraudulent mortgage loan.

The parties do not dispute that the plaintiff, on the basis of its fraudulent conveyance claims, recorded a notice of lis pendens against the property. The plaintiff appended a copy of the notice of lis pendens, dated July 28, 2017, to its complaint.

On October 15, 2018, the plaintiff filed a motion to stay the present action pending the resolution of the guaranty action, which, according to the plaintiff, was scheduled at the time to be tried in April, 2019. On December 14, 2018, after initially having objected to the motion to stay, the defendants consented to the trial court staying the present action for three months. On January 14, 2019, the court, Lee, J ., upon the parties’ consent, stayed the present action until March 15, 2019.

On October 31, 2019, the defendants filed a motion to terminate the discretionary stay, contending that, since March 15, 2019, the present action had been "informally stayed by agreement with the consent of the court" but that they no longer assented to the stay.⁵ On December 3, 2019, the plaintiff filed an objection. On January 9, 2020, the court denied the defendants’ motion, determining that "[t]he rationale for the original stay of this action remains valid. The resolution of this case is heavily dependent upon the result of the trial on the merits in [the guaranty action]. As a result, the possibility of an inconsistent result is substantial. The continuation of the stay until the [guaranty action] is resolved will promote judicial economy."

On August 21, 2020, Number Six filed a motion to terminate the discretionary stay, asserting that it

intended to file, inter alia, a motion to discharge the notice of lis pendens that the plaintiff had recorded against the property. Number Six stated that an appeal had been filed in the guaranty action, thereby delaying resolution of that separate matter.⁶ On September 14, 2020, the plaintiff filed an objection, arguing, inter alia, that any delays in the guaranty action were caused by Peter and Patricia and that there had been no change in circumstances warranting a termination of the stay. On September 18, 2020, Number Six filed a reply brief. On September 21, 2020, the court, Ozalis, J. , denied Number Six's motion and sustained the plaintiff's objection "[f]or the reasons stated in the plaintiff's objection ... and as the rationale for the original stay of this action remains ...." On October 29, 2020, Number Six filed a motion to reargue, which the court summarily denied on December 2, 2020.

On February 16, 2021, Number Six filed the motion to terminate stay at issue in this appeal, requesting that the discretionary stay be lifted for the limited purpose of enabling it to file a motion to discharge the notice of lis pendens. That same day, Number Six filed the motion to discharge, claiming that (1) the plaintiff lacks probable cause to sustain the validity of its claims asserted against Number Six and (2) the notice of lis pendens is defective and, thus, "void and of no force or effect." On March 12, 2021, the plaintiff filed a combined objection to both motions. On March 24, 2021, Number Six filed a reply brief. On March 29, 2021, the court summarily denied both motions and, in addition, summarily sustained the plaintiff's objection. On April 1,

2021, Number Six filed this appeal challenging the denials of both motions.

On June 22, 2021, the plaintiff filed with this court a corrected motion to dismiss this appeal for lack of a final judgment.⁷ On July 2, 2021, Number Six filed an objection. On July 28, 2021, while the corrected motion to dismiss was pending, this court, sua sponte, ordered the trial court to articulate whether its denial of the motion to discharge and its order sustaining the plaintiff's objection "were based on the merits or were procedural because of the stay of this case." On July 29, 2021, the trial court articulated that the "orders denying the motion to discharge and sustaining the objection thereto were procedural because of the stay of this case." That same day, this court granted the plaintiff's corrected motion to dismiss this appeal for lack of a final judgment.

On August 9, 2021, Number Six filed a motion to reconsider this court's judgment of dismissal. On August 17, 2021, the plaintiff filed an objection. On September 3, 2021, while the motion to reconsider was pending, this court ordered, sua sponte, the parties to file supplemental memoranda to address the following two issues: (1) whether, in light of the trial court's articulation stating that its denial of the motion to discharge was " ‘procedural,’ " our Supreme Court's decision in Ahneman v. Ahneman , 243 Conn. 471, 706 A.2d 960 (1998), "appl[ies] such that [Number Six], as to the denial of the motion to discharge ... has filed its appeal from a final judgment"; and (2) "[i]f this court concludes that [Number Six] has appealed from a final judgment as to the denial of the motion to discharge ... because Ahneman applies, [whether] this court

[should] remand the case for a prompt hearing on the motion to discharge, or [whether] there [are] other issues in this appeal that would remain to be addressed as to the denial of that motion ...." The parties filed supplemental memoranda in accordance with our briefing order.

On October 6, 2021, we granted the motion to reconsider and denied the corrected motion to dismiss without prejudice to the parties addressing the final judgment issue in their respective appellate briefs,⁸ as augmented by their supplemental memoranda. In addition, we ordered that this appeal would be heard en banc.

I

We first address the portion of this appeal taken from the trial court's denial of the motion to...