Schaeppi v. Unifund CCR Partners ( 2015 )

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ELLEN SCHAEPPI ET AL. v. UNIFUND CCR
PARTNERS ET AL.
(AC 36524)
Lavine, Beach and Prescott, Js.
Argued April 16—officially released November 3, 2015
(Appeal from Superior Court, judicial district of
Hartford, Hon. Robert F. Stengel, judge trial referee.)
Kirk D. Tavtigian, Jr., for the appellants-appellees
(plaintiffs).
Robert W. Cassot, with whom, on the brief, was Cris-
tin E. Sheehan, for the appellees-appellants (defendant
Tobin & Melien et al.).
Jonathan D. Elliot and Drummond C. Smith filed a
brief for the appellee (named defendant).
Opinion
BEACH, J. This case is before us for the third time.
The plaintiffs, Ellen Schaeppi and Ernest Schaeppi,
appeal from the judgment of the trial court rendered,
in part, in favor of the defendants, Tobin & Melien,
Joseph M. Tobin, P.C., Peter E. Melien, P.C. (collec-
tively, T&M), and Unifund CCR Partners (Unifund). The
plaintiffs’ action sounded in vexatious litigation; they
alleged that the defendants lacked probable cause to
pursue an action seeking to foreclose a judgment lien.
On appeal, the plaintiffs claim that the trial court erred
in concluding that (1) Unifund proved its defense of
reliance on the advice of its counsel, T&M, and (2) T&
M had probable cause to institute and to pursue part
of the foreclosure action.1 On cross appeal, T&M claims
that the trial court erred in concluding that it did not
have probable cause to pursue an appeal from the denial
of its motion to open the judgment in the foreclosure
action. Unifund filed a brief contesting the plaintiffs’
arguments on appeal. We disagree with the plaintiffs’
claims on appeal and agree with T&M regarding the
issue it raised in its cross appeal.
The following undisputed facts and procedural his-
tory, as previously set forth by this court are relevant
to our analysis. ‘‘On July 27, 2004, [Unifund]2 [brought
an action] seeking to collect credit card debt allegedly
owed by the [plaintiffs]. A hearing was held on October
31, 2005, before an attorney fact finder. In his January
5, 2006 report,3 [the fact finder] recommended judgment
in favor of the [plaintiffs] because [Unifund] had failed
to establish that the credit card debt had been assigned
to [Unifund]. [Unifund] objected to the acceptance of
the findings of fact on February 6, 2006. The court,
Miller, J., remanded the matter to the attorney fact
finder for a rehearing on the issue of whether there had
been a valid assignment of the credit card debt. After
the hearing on remand was held on March 27, 2006, the
attorney fact finder recommended, in a report dated
March 30, 2006, that judgment enter in favor of [Uni-
fund]. On June 19, 2006, the court rendered judgment
in favor of [Unifund], stating: Judgment shall enter in
favor of [Unifund] on the fact finder’s report as revised
after remand. [Unifund] placed a judgment lien4 on real
property owned by the [plaintiffs] which was recorded
in the Glastonbury land records on July 18, 2006. [Uni-
fund] then filed with the court a motion for an order
of weekly payments on August 25, 2006, seeking pay-
ments of $35 per week. On September 11, 2006, the
court, Miller, J., granted the motion and set payments
of $25 per week to commence on October 11, 2006.
‘‘By complaint filed on November 13, 2006, [Unifund]
then sought foreclosure on the judgment lien. On Sep-
tember 10, 2007, [Unifund] filed a motion for partial
summary judgment as to liability. By memorandum of
decision filed March 20, 2008, the court, Hon. Robert
Satter, judge trial referee, denied the motion because
the issue of what portion of the [plaintiffs’] interest in
their property is exempt . . . gives rise to an issue of
fact, which . . . precludes the granting of [Unifund’s]
motion for summary judgment. . . . The court went
on to state that there was another ground on which
[Unifund’s] motion for summary judgment must be
denied. . . . The court indicated it had taken judicial
notice of and examined the court file of the debt collec-
tion action that formed the basis of the foreclosure
action. It concluded from that examination that no
money judgment had entered in that case because the
attorney fact finder had made no finding as to the
amount of debt. Moreover, the court continued, Judge
Miller had subsequently ordered that judgment enter in
favor of [Unifund] on the basis of the attorney fact
finder’s report without stating the amount of the judg-
ment. Judge Satter reasoned that, because General Stat-
utes § 52-350f provides in relevant part that a money
judgment may be enforced, by execution or by foreclo-
sure of a real property lien, to the amount of the money
judgment, and General Statutes § 52-380a (a) provides
in relevant part that [a] judgment lien, securing the
unpaid amount of any money judgment, including inter-
est and costs, may be placed on any real property, the
judgment lien underlying the foreclosure action was of
questionable validity. The court, however, acknowledg-
ing that the only motion before it was [Unifund’s]
motion for summary judgment, declared that it was
making no such ruling.
‘‘On March 28, 2008, [Unifund] filed a motion with
the court, Miller, J., seeking clarification of its June 19,
2006 judgment. The court held a hearing on the matter
on May 12, 2008, during which [Unifund] indicated that
it was seeking to have the court clarify the dollar
amount of the judgment. After hearing from both par-
ties, the court concluded that there never was a finding
as to the amount of the debt and that the judgment
should not have been allowed to enter without a finite
dollar amount. As a result, the court further concluded,
there never was a money judgment entered in the
action, and, therefore, under the unique circumstances
of the case, there was no basis for the court to clarify
the judgment.
‘‘On July 31, 2008, the [plaintiffs] filed a motion for
summary judgment, attaching Judge Satter’s March 20,
2008 memorandum of decision addressing [Unifund’s]
motion for partial summary judgment. . . . After a
hearing was held on the matter, Judge Satter, by memo-
randum of decision filed October 15, 2008, granted the
motion, concluding that, as a matter of law, a judgment
of no amount, underlying a judgment lien in an incorrect
amount cannot form the basis of a foreclosure
action. . . .
‘‘[In the first appeal, Unifund CCR Partners v.
Schaeppi, 126 Conn. App. 370, 11 A.3d 723 (2011), [Uni-
fund] appealed from the court’s granting of the [plain-
tiffs’] motion for summary judgment, claiming, inter
alia, that the court improperly concluded that the judg-
ment lien that formed the basis of the foreclosure action
was invalid as a matter of law because it sought to
secure a money judgment of no amount. . . . [Unifund]
advanced two alternate arguments in support of that
claim. First, [Unifund] argued that the judgment ren-
dered by Judge Miller on June 19, 2006, was a full and
final judgment as to liability and damages because the
amount of the judgment was ascertainable from the
record. . . . [Unifund] argued that, in the alternative,
the order for weekly payments entered by the court on
September 11, 2006, was a money judgment and, could,
therefore, serve as the basis for a judgment lien. . . .
‘‘This court rejected both of [Unifund’s] arguments
and affirmed the trial court’s granting of the [plaintiffs’]
motion for summary judgment. . . . In reaching its
decision, this court first determined that the June 19,
2006 judgment was not a full and final judgment because
it did not specify with certainty the amount for which
it was rendered, nor was the amount ascertainable from
the record or by mere mathematical computation. . . .
Without deciding whether the installment payment
order of September 11, 2006, was a money judgment,
this court concluded that it was impossible for it to
have served as the basis for the judgment lien, as the
judgment lien was recorded weeks before the court
entered its installment payment order. . . .
‘‘On June 21, 2011, following this court’s affirmance
of the trial court’s granting of the [plaintiffs’] motion
for summary judgment, [Unifund] filed a motion to open
and modify the judgment of June 19, 2006. The court
denied that motion and [Unifund’s] subsequent motion
for reargument and reconsideration filed on August 2,
2011. [Unifund], on November 7, 2011, filed a motion
for articulation, requesting that the court articulate its
rationale for denying [Unifund’s] motion to open and
modify the June 19, 2006 judgment. On December 2,
2011, the court granted [Unifund’s] motion for articula-
tion and explained in its articulation that the judgment
[Unifund] sought to open, lacking a specific dollar
amount, was not a valid judgment. Thus, the court
explained, it did not have the ability to open a judgment
that was never really a judgment.’’ (Citations omitted;
internal quotation marks omitted.) Unifund CCR Part-
ners v. Schaeppi, 140 Conn. App. 281, 283–86, 59 A.3d
282 (2013).
Unifund again appealed. The second appeal was
taken from the court’s denial of the June 21, 2011 motion
to open and modify the judgment rendered on June 19,
2006. Id., 286. This court rejected Unifund’s argument
that the trial court erred in denying its motion to open,
reasoning that because ‘‘there existed no valid judgment
to open in the first instance . . . the court did not
abuse its discretion in finding that it could not open
that which was never properly entered as a judgment.’’
Id., 287.
The plaintiffs then brought the present action alleging
both statutory and common-law vexatious litigation
against the defendants for pursuing the foreclosure
action against them, and sought damages for embar-
rassment, humiliation, loss of sleep, and mental and
emotional distress, physical injury and aggravation of
preexisting physical and emotional injuries. The plain-
tiffs also sought an award of double or treble damages
pursuant to General Statutes § 52-568,5 punitive dam-
ages, costs, interests and attorney’s fees.
In its December 18, 2013 decision, the court, Hon.
Robert F. Stengel, judge trial referee, found it undis-
puted that T&M commenced a foreclosure action
against the plaintiffs on behalf of its client, Unifund.
The court found that Unifund acted on the advice of
its counsel, T&M, and, thus, Unifund proved its special
defense. The court further found that T&M had probable
cause to initiate and to pursue the foreclosure proceed-
ings up to and including the filing of the motion to
open. The court found, however, that T&M did not have
probable cause to pursue the appeal from the denial of
the motion to open, but also that T&M did not act
with malice. The court awarded the plaintiffs double
damages pursuant to § 52-568, for a total amount of
damages of $28,000. This appeal and cross appeal
followed.
I
The plaintiffs first claim that the trial court erred in
determining that Unifund satisfied its burden of proving
that it had relied on the advice of counsel in initiating
and prosecuting the foreclosure action. We disagree.
‘‘Advice of counsel is a complete defense to an action
of . . . vexatious suit when it is shown that the defen-
dant . . . instituted his civil action relying in good faith
on such advice, given after a full and fair statement of
all facts within his knowledge, or which he was charged
with knowing. . . . The defendant has the burden of
proof with respect to this special defense. . . .
Whether there was a full and fair disclosure of material
facts as required by the advice of counsel defense is a
question of fact . . . and [a]ppellate review of findings
of fact is limited to deciding whether such findings
were clearly erroneous.’’ (Citations omitted; footnote
omitted; internal quotation marks omitted.) Verspyck
v. Franco, 274 Conn. 105, 112–13, 874 A.2d 249 (2005).
The trial court found that T&M had provided legal
representation to Unifund since 1999 and that T&M
represented Unifund at all relevant times in this foreclo-
sure action. The court further found that Unifund had
relied in good faith on T&M’s legal advice after giving
T&M a full and fair statement of all the relevant facts
in the case. The court concluded that Unifund had relied
on the representations of T&M in the foreclosure action
and found Unifund’s defense proved.
The plaintiffs argue that proof of reliance was lacking
because no employee of Unifund testified at the vexa-
tious litigation trial and no witness with personal knowl-
edge testified that Unifund relied on T&M’s advice in
initiating and prosecuting the foreclosure action. The
plaintiffs emphasize certain evidence that was admitted
in the vexatious litigation trial to support their proposi-
tion that Unifund did not prove good faith. The plaintiffs
highlight e-mail communications between representa-
tives of Unifund and T&M, that indicate that T&M
informed Unifund that it had secured a judgment against
the plaintiffs and asked for permission to foreclose the
judgment lien, and a representative of Unifund
responded affirmatively. They also point to evidence
that T&M had faxed to Unifund statements from the
plaintiffs regarding their illnesses and lack of financial
resources. T&M asked Unifund if it wanted to proceed
with the foreclosure and Unifund answered affirma-
tively. In turn, Unifund argues that, on the basis of the
testimony at the vexatious litigation trial provided by
Scott Dellaventura, an attorney for T&M at the relevant
times, it was clear that Unifund relied on the advice of
T&M.
‘‘In a case tried before a court, the trial judge is the
sole arbiter of the credibility of the witnesses and the
weight to be given specific testimony. . . . It is within
the province of the trial court, as the fact finder, to
weigh the evidence presented and determine the credi-
bility and effect to be given the evidence.’’ (Citation
omitted; internal quotation marks omitted.) Cadle Co.
v. D’Addario, 268 Conn. 441, 462, 844 A.2d 836 (2004).
The evidence that the plaintiffs stress, moreover, does
not demonstrate lack of reliance. That T&M received
Unifund’s consent before initiating and continuing to
prosecute the foreclosure lawsuit is not dispositive as
to whether Unifund relied on the advice of T&M; an
attorney should proceed with a lawsuit only at the
instance of the client. The material point is whether
there was a valid judgment lien on which to foreclose.
In the e-mail highlighted by the plaintiffs, an attorney
for T&M represented that a judgment had been
obtained. On being informed of the judgment, Unifund
gave consent to proceed with foreclosure.
The plaintiffs point to no law for the proposition that
specific evidence from designated witnesses must be
introduced in order to satisfy the element of good faith
reliance. Dellaventura testified at the vexatious litiga-
tion trial that T&M represented Unifund in as many as
2000 debt collection matters per year and that T&M
would ‘‘go through them to see if there were any con-
flicts or any other issues that we couldn’t proceed on
and then [we] would begin sending out a letter of
demand . . . .’’ He further testified that he believed
that there had been a judgment of $9382.05 against the
plaintiffs in the foreclosure action and that he did not
tell Unifund that the judgment was invalid. He recom-
mended to Unifund that, in order to execute on the
judgment, various steps had to be taken. He testified
that Unifund generally agreed with his recommenda-
tions. For the foregoing reasons, the trial court did not
err in finding that Unifund had proved its defense of
reliance on advice of counsel.
II
The primary issue in this case concerns the trial
court’s conclusions regarding probable cause. On
appeal, the plaintiffs claim that the court erred in con-
cluding that T&M had probable cause to initiate and
to pursue the foreclosure action at all, because the
judgment lien sought to be foreclosed was invalid. On
cross appeal, T&M claims that the court erred in con-
cluding that there was no probable cause to appeal
from the denial of the motion to open. We disagree
with the plaintiffs’ claims on appeal and agree with
T&M’s claim in its cross appeal.
‘‘The cause of action for vexatious litigation permits
a party who has been wrongfully sued to recover dam-
ages. . . . In Connecticut, the cause of action for vexa-
tious litigation exists both at common law and pursuant
to statute. Both the common law and statutory causes
of action [require] proof that a civil action has been
prosecuted . . . . Additionally, to establish a claim for
vexatious litigation at common law, one must prove
want of probable cause, malice and a termination of
suit in the plaintiff’s favor. . . . The statutory cause of
action for vexatious litigation exists under § 52-568, and
differs from a common-law action only in that a finding
of malice is not an essential element, but will serve as a
basis for higher damages.’’ (Citations omitted; footnote
omitted; internal quotation marks omitted.) Bernhard-
Thomas Building Systems, LLC v. Dunican, 286 Conn.
548, 553–54, 944 A.2d 329 (2008).
In assessing probable cause in vexatious litigation
actions against attorneys and law firms, the ‘‘critical
question [is] whether on the basis of the facts known
by the law firm, a reasonable attorney familiar with
Connecticut law would believe he or she had probable
cause to bring the lawsuit. . . . As is implied by its
phrasing, the standard is an objective one that is neces-
sarily dependent on what the attorney knew when he
or she initiated the lawsuit.’’6 (Citation omitted; internal
quotation marks omitted.) Embalmers’ Supply Co. v.
Giannitti, 103 Conn. App. 20, 35, 929 A.2d 729, cert.
denied, 284 Conn. 931, 934 A.2d 246 (2007).
‘‘Whether there is probable cause in a [vexatious liti-
gation] case is a question of law, upon which our scope
of review is plenary.’’ Charlotte Hungerford Hospital
v. Creed, 144 Conn. App. 100, 116, 72 A.3d 1175 (2013).
A
The plaintiffs claim on appeal that the court’s conclu-
sions regarding the existence of probable cause were
incorrect and that T&M did not have probable cause
to initiate and to continue to prosecute the foreclosure
action because the judgment in the debt collection
action did not state (1) the amount of debt or (2) the
amount of prejudgment interest. The plaintiffs also
argue that T&M lacked probable cause to continue to
prosecute the foreclosure action after having received
adverse rulings from various courts that the underlying
judgment was unenforceable. We are not persuaded.
1
The plaintiffs argue that the court erred in its determi-
nation that T&M had probable cause to pursue the fore-
closure action because an attorney could not have
reasonably concluded that the judgment incorporating
the fact finder’s report was definitive, unambiguous,
and certain as to amount. We disagree.
‘‘To be conclusive on the parties and to terminate
litigation, a judgment must be definitive and not ambigu-
ous or uncertain; otherwise it is defective. . . . Partic-
ularly, [a] money judgment must specify with certainty
the amount for which it is rendered, or if the amount
is not stated, it must be ascertainable from the record
or by mere mathematical computation.’’ (Citations
omitted; emphasis added; internal quotation marks
omitted.) Suffield Development Associates Ltd. Part-
nership v. National Loan Investors, L.P., 97 Conn. App.
541, 560–61 n.19, 905 A.2d 1214, cert. denied, 280 Conn.
943, 912 A.2d 479 (2006). In some circumstances, there
may be some gray area in the determination of whether
the amount of a judgment is ascertainable from the
record or by mathematical computation.
In the foreclosure action, the trial court and the
Appellate Court disagreed on several occasions with
T&M’s theory that the judgment was valid. The court,
Hon. Robert Satter, judge trial referee, granted the
plaintiffs’ motion for summary judgment in the foreclo-
sure case on October 15, 2008, reasoning that the under-
lying judgment in the debt collection case was
unenforceable because no money judgment had
entered. Further, this court determined that ‘‘the judg-
ment entered against the [plaintiffs] on June 19, 2006,
was not definitive, unambiguous or certain as to the
amount of damages owed.’’ Unifund CCR Partners v.
Schaeppi, supra, 126 Conn. App. 382. Subsequent to
that ruling, the trial court, Miller, J., denied Unifund’s
motion to open, stating that it could not ‘‘open a judg-
ment that was never really a judgment.’’ This ruling was
affirmed on appeal. Unifund CCR Partners v. Schaeppi,
supra, 140 Conn. App. 287.
These adverse rulings do not necessarily negate the
existence of probable cause, nor do the facts underlying
the judgment lien sought to be foreclosed. ‘‘[P]robable
cause may be present even where a suit lacks merit.
Favorable termination of the suit often establishes lack
of merit, yet the plaintiff in [vexatious litigation] must
separately show lack of probable cause. . . . The
lower threshold of probable cause allows attorneys and
litigants to present issues that are arguably correct,
even if it is extremely unlikely that they will win . . . .
Were we to conclude . . . that a claim is unreasonable
wherever the law would clearly hold for the other side,
we could stifle the willingness of a lawyer to challenge
established precedent in an effort to change the law.
The vitality of our common law system is dependent
upon the freedom of attorneys to pursue novel, although
potentially unsuccessful, legal theories.’’ (Citations
omitted; emphasis altered; internal quotation marks
omitted.) Falls Church Group, Ltd. v. Tyler, Cooper &
Alcorn, LLP, 281 Conn. 84, 103–104, 912 A.2d 1019
(2007).
An attorney familiar with Connecticut law could have
examined the events in the record leading to the court’s
June 19, 2006 judgment and reasonably could have
believed that it was reasonable to argue that the amount
of the judgment was ascertainable from the record. The
first fact finder report stated that ‘‘[a]s of August 29,
2002, the [plaintiffs] owed AT&T Universal $9,382.05.’’
(Emphasis added). During the March 27, 2006 hearing,
held prior to the issuing of the second fact finder report,
the attorney fact finder stated ‘‘the only issue is whether
[Unifund] is entitled to collect the debt . . . .’’ (Empha-
sis added). In the fact finder’s second report, the attor-
ney fact finder found that there had been a valid
assignment of the debt to Unifund and that the plaintiffs
were ‘‘liable to [Unifund] for the amount of the credit
card charges made on the AT&T Universal Account
number [in question] with interest.’’ At the hearing fol-
lowing the second fact finder report, the court, Miller,
J., stated that the attorney fact finder found that a
valid assignment had occurred and had recommended
judgment ‘‘in favor of [Unifund] presumably at the same
numbers as was set forth in the original fact finder’s
report.’’ The court, Miller, J., rendered judgment ‘‘in
accordance with the decision of the fact finder.’’ The
court, Miller, J., granted Unifund’s motion for weekly
payments on the debt.
An attorney reasonably could have deemed it plausi-
ble that in the first report, the attorney fact finder made
a factual finding that the amount owed by the plaintiffs
on the account in question was $9382.05. An attorney
reasonably could have considered the second report,
which concluded that the sole issue at that time was
the validity of the assignment and recommended that
judgment enter in favor of Unifund as a result of a
valid assignment. An attorney reasonably could have
interpreted Judge Miller’s statement at the hearing as
to the amount of debt and subsequent granting of the
motion for weekly payments to mean that there had
been a valid judgment as to the amount of debt owed.7
An attorney may perhaps not have predicted that the
effort would be successful, but attorneys, as noted pre-
viously, are not required to pursue only actions that
succeed.
There is no dispute that the plaintiffs owed the debt
or that the debt was properly assigned to Unifund. T&M
could have pursued different and perhaps more fruitful
options. But an attorney in T&M’s position at the time
the relevant procedural events were happening reason-
ably could have in good faith chosen to pursue a foreclo-
sure action on the ultimately quixotic theory that an
amount of judgment was reasonably ascertainable from
the prior judgments and fact finder reports that were
referenced. Though the theory turned out to be faulty,
its proponent was not so lacking in probable cause to
be found to have acted vexatiously.
2
The plaintiffs next argue that the court improperly
determined that the defendants had probable cause to
pursue the foreclosure action because an attorney rea-
sonably would have realized that a foreclosure action
lawfully could not be commenced prior to the entry of
a final judgment in the underlying debt collection case,
and in this case there had not been a specific determina-
tion of the amount of prejudgment interest included in
the judgment.
The trial court in its memorandum of decision did
not address the plaintiffs’ final judgment claim, which
was raised in their posttrial brief. The plaintiffs filed a
motion to reargue and reconsider on the ground that
the trial court did not address the final judgment issue.
The court denied the motion. The plaintiffs did not file
a motion to review. We ordinarily do not review claims
that have not been decided by the trial court. See Silver
v. Holtman, 149 Conn. App. 239, 254–55, 90 A.3d 203
(‘‘when an issue has not been ruled on by the trial court,
an appellate court may not review the issue for the first
time on appeal’’ [emphasis omitted]), cert. denied, 312
Conn. 904, 91 A.3d 906 (2014).
We also note, however, that the plaintiffs’ argument
regarding the lack of a final judgment is misplaced. The
cases cited by the plaintiffs in support of their argument,
Collard & Roe, P.C. v. Klein, 87 Conn. App. 337, 344–45,
865 A.2d 500, cert. denied, 274 Conn. 904, 876 A.2d 13
(2005), and IBM Credit Corp. v. Mark Facey & Co., 44
Conn. App. 490, 493–94, 690 A.2d 410 (1997), advance
the general principle that appeals can be taken only
from final judgments.8 Although the question of whether
an appellate court has jurisdiction to hear an appeal
may be related to the issue of whether T&M had proba-
ble cause to foreclose, the issues are not identical. The
lack of a specific amount of prejudgment interest adds
a degree of imprecision to the judgment, but it does
not as a matter of law eliminate probable cause, in light
of the ability to peruse the record of the underlying
case in order to ascertain the amount of the judgment.
The judgment lien in itself did not state a specific
amount of prejudgment interest; it did provide that
‘‘Unifund . . . did obtain a judgment in its favor against
Ellen A. Schaeppi . . . and Ernest A. Schaeppi . . .
for the sum of $9382.05 principal damages, plus prejudg-
ment interest as awarded by the court . . . .’’ If the
record revealed that no prejudgment interest was
‘‘awarded by the court,’’ then presumably only the prin-
cipal amount would constitute the debt subject to the
judgment lien. An attorney, then, reasonably could have
attempted to proceed on the theory that the lack of an
amount of prejudgment interest was not necessarily
a fatal defect. To the extent, then, that the award of
prejudgment interest was subject to either clarification
or elimination, the judgment lien may conceivably have
been thought to have been amenable to foreclosure.9
3
The plaintiffs claim that the trial court erred in
determining that T&M had probable cause to continue
to prosecute the foreclosure action after being put on
notice that the amount of damages had not been deter-
mined in the underlying debt collection action. We are
not persuaded.
The plaintiffs argue that on numerous occasions
throughout the litigation in the foreclosure action,
T&M was ‘‘expressly notified’’ that the judgment in the
debt collection matter contained no definite amount.
They claim that T&M ‘‘fabricated’’ an amount of judg-
ment and continued to prosecute the foreclosure action.
The plaintiffs contend that Judge Miller’s 2008 ruling
on the motion to clarify ‘‘makes this abundantly clear.’’10
In the course of its ruling on the vexatious litigation
claims, the trial court concluded that T&M had probable
cause to continue to pursue the foreclosure action11
and that, despite the adverse rulings by Judge Miller
and Judge Satter, ‘‘there was no controlling case law
rendering T&M’s legal theory unreasonable . . . .’’ The
court cited Oglesby v. Prudential Ins. Co. of America,
259 Ky. 620, 625, 82 S.W.2d 824 (1935), for the proposi-
tion that ‘‘pleadings in [a case] may be looked to in aid
of the judgment, and that the certainty of the latter
may be obtained from consulting preceding parts of
the record containing the necessary data therefor.’’ See
McCarthy v. Warden, 213 Conn. 289, 293, 567 A.2d 1187
(1989) (court may ‘‘take judicial notice of the court files
in another suit between the parties’’), cert. denied, 496
U.S. 939, 110 S. Ct. 3220, 110 L. Ed. 2d 667 (1990). At
the time of the initiation and continuing prosecution of
the foreclosure case, T&M had at least a colorable basis
for its legal theory—that the amount of the judgment
could be ascertained by examination of both fact finder
reports—to support a reasonable belief in probable
cause.
The trial court, in ruling on the issue of probable
cause as to the continuation of the foreclosure proceed-
ings, determined that ‘‘T&M had reason to believe there
was probable cause to continue pursuit of the foreclo-
sure action by attempting to clarify the underlying judg-
ment inasmuch as its ambiguity was the root of T&M’s
struggles in the foreclosure action. T&M’s strategy was
that of an innovative, persistent, and zealous advocate.
Based upon its legal theory that the judgment amount
was ascertainable from the record, T&M was justified
in appealing Judge Satter’s ruling on the [plaintiffs’]
motion for summary judgment.’’ We agree with the trial
court in this regard.
T&M did not lose probable cause to pursue the fore-
closure action because of adverse rulings along the way.
The standard for determining probable cause is not
whether there are adverse rulings by the court or
whether the claim is ultimately determined to be with-
out merit. See Falls Church Group, Ltd. v. Tyler, Coo-
per & Alcorn, LLP, supra, 281 Conn. 104 (if claims were
held unreasonable wherever law clearly held for other
side, it would stifle attorney’s willingness to challenge
established precedent or pursue novel, although poten-
tially unsuccessful, legal theories). Rather, the standard
is whether the defendant in a vexatious litigation action
had ‘‘knowledge of facts, actual or apparent, strong
enough to justify a reasonable man in the belief that
he has lawful grounds for prosecuting the defendant in
the manner complained of.’’ (Internal quotation marks
omitted.) DeLaurentis v. New Haven, 220 Conn. 225,
256, 597 A.2d 807 (1991). For the reasons stated in part
II A 1 and 2 of this opinion, T&M had probable cause to
initiate the foreclosure action and, for the same reasons,
had probable cause to continue prosecution.
B
On cross appeal, T&M claims that the court erred in
concluding that T&M lacked probable cause to appeal
from Judge Miller’s denial of its motion to open the
judgment. We agree.
On the issues of the motion to open and the appeal
therefrom, the court ruled as follows: ‘‘After the Appel-
late Court affirmed Judge Satter’s summary judgment
ruling, T&M pursued a different, and perhaps more cre-
ative, strategy in order to remedy the underlying judg-
ment in the debt collection action that the Appellate
Court deemed defective. T&M sought to open the under-
lying judgment in the debt collection action based upon
the theory that there had been a mutual mistake
between the parties, to wit: a judgment had entered
without a specific dollar amount because Unifund, the
[plaintiffs], and the court believed the judgment to
include a specific amount of damages. Based upon this
mutual mistake, T&M asked the court to use its equita-
ble powers to open the judgment so that it could be
remanded to the original fact finder so that a specific
amount of damages could be found in the debt collec-
tion action. . . . At first blush, T&M’s motion to open
judgment may appear to be duplicative of its previous
motion seeking clarification of the debt collection judg-
ment. . . . The two motions, however, sought two fun-
damentally different forms of relief from the court. In
seeking clarification, T&M asked Judge Miller to clarify
the amount of the judgment. The court, Miller, J., pre-
sumably declined to [do] so because a court does not
have the power to find additional facts or different facts
than a fact finder; rather, a court has the option of
remanding the matter to the fact finder for further find-
ings. In contrast to the motion to clarify, T&M’s motion
to open judgment invoked the equitable powers of the
court to remand the case back to the fact finder, which
is fundamentally different from asking the court itself
to articulate the amount of the judgment. It is with
these considerations in mind that this court finds that
T&M had probable cause to move to open the underly-
ing judgment in the debt collection action. Given the
law and facts known to T&M, this was an aggressive,
but nevertheless innovative, tactic to use in order to
vindicate the interests of its client, Unifund, and seek
judgment in its favor.
‘‘The court, however, is not persuaded that T&M had
probable cause to pursue an appeal of Judge Miller’s
denial of T&M’s motion to open judgment for the rea-
sons that follow. In ruling on the motion to open judg-
ment, the court, Miller, J., stated: Judge Satter has ruled
that any judgment ever obtained in this case was fatally
defective, because the [f]act[f]inder who heard the orig-
inal collection claim did not recommend judgment in
a specific dollar amount. This court does not have the
ability to open a judgment that was never, really a judg-
ment. . . . While it was a creative approach to move
to open the underlying judgment, at this point, Judge
Miller had made it painstakingly clear that a motion to
open judgment could not be used as a mechanism by
which to correct an order that was never legally a judg-
ment. And, predictably, the Appellate Court agreed,
finding that Judge Miller did not abuse his discretion
in denying the motion to open judgment inasmuch as
the Appellate Court has previously agreed that there
was never a valid judgment in the underlying . . . debt
collection action to begin with. Unifund CCR Partners
v. Schaeppi, supra, 140 Conn. App. 286–87. Further-
more, the court finds that there was no probable cause
for T&M to have raised its other argument in the second
appeal, namely, that even if the underlying judgment
was defective, Judge Miller’s order of installment pay-
ments is a valid judgment and therefore Judge Miller
abused his discretion in declining to open it. In the first
appeal, the Appellate Court had already held that the
order for weekly payments was entered more than three
weeks after [Unifund] recorded the judgment lien. As
a result, it is impossible, regardless of whether the order
was a money judgment . . . for the validity of the judg-
ment lien to be grounded in the September 11, 2006
order. Unifund CCR Partners v Schaeppi, supra, 126
Conn. App. 382–83. Additionally, as the Appellate Court
noted in the second appeal, T&M’s contention that a
subsequent entry of an order for weekly payments could
remedy a defective judgment is simply logically untena-
ble and that there is absolutely no legal authority for
such a proposition. Unifund CCR Partners v. Schaeppi,
supra, [287–88]. Thus, there was also no probable cause
to raise that argument. Based upon these considera-
tions, the court concludes that T&M lacked probable
cause to pursue a second appeal to the Appellate
Court.’’ (Internal quotation marks omitted.)
The trial court properly concluded that T&M had
probable cause to pursue the novel theory of a motion
to open.12 However, because T&M had probable cause
to pursue the motion to open, it also had probable cause
to pursue an appeal; to hold to the contrary would be
inconsistent. Although Judge Miller denied the motion
to open and, in doing so, clearly stated that the judgment
was fatally defective, the standard for probable cause
in a vexatious litigation action does not depend on the
meritorious nature of a claim. As recited previously in
part II A 1 of this opinion, ‘‘[f]avorable termination of
the suit often establishes lack of merit, yet the plaintiff
in [vexatious litigation] must separately show lack of
probable cause. . . . The lower threshold of probable
cause allows attorneys and litigants to present issues
that are arguably correct, even if it is extremely unlikely
that they will win . . . . Were we to conclude . . .
that a claim is unreasonable wherever the law would
clearly hold for the other side, we could stifle the will-
ingness of a lawyer to challenge established precedent
in an effort to change the law. The vitality of our com-
mon law system is dependent upon the freedom of
attorneys to pursue novel, although potentially unsuc-
cessful, legal theories.’’ (Citations omitted; emphasis
omitted; internal quotation marks omitted.) Falls
Church Group, Ltd. v. Tyler, Cooper & Alcorn, LLP,
supra, 281 Conn. 103–104. Even though T&M received
a clearly worded adverse ruling in the trial court on the
motion to open, and, at the time of the filing of the
appeal, it was not likely that it would prevail, T&M did
not thereby lack probable cause to pursue the appeal
from the denial of the motion to open.13 An attorney
reasonably could have concluded that the theory was
untested and, therefore, that pursuing the appeal was
reasonable. General Statutes § 52-263 provides a right
of appeal to parties, such as T&M, that have been
aggrieved by decisions of a trial court.14 T&M, then, had
probable cause to pursue the appeal from the denial of
the motion to open.
The judgment is reversed only as to the conclusion
that T&M lacked probable cause to pursue an appeal
from the denial of the motion to open and as to the
award of damages, and the case is remanded with direc-
tion to render judgment in favor of T&M. The judgment
is affirmed in all other respects.
In this opinion the other judges concurred.
1
The plaintiffs also claim that the court erred in its award of damages
and that the case should be remanded for a new trial as to compensatory
and punitive damages. The trial court’s award of damages was based on its
conclusion that T&M lacked probable cause only to pursue an appeal from
the denial of its motion to open the judgment in the foreclosure action.
Because we agree with T&M’s claim on cross appeal that the court erred
in concluding that T&M lacked probable cause as to any portion of the
prior foreclosure proceeding, we necessarily reverse the court’s award of
damages. Thus, we have no need to address this claim.
The plaintiffs further claim that the court erred in finding that T&M did
not act with malice. Malice is an element of the common-law cause of action
for vexatious litigation. Malice is not an element of the statutory cause of
action for vexatious litigation, but a finding of malice may act as a multiplier
of damages. Bernhard-Thomas Building Systems, LLC v. Dunican, 286
Conn. 548, 554, 944 A.2d 329 (2008). Because we conclude that want of
probable cause, an essential element of both statutory and common-law
causes of action, is lacking, thereby defeating any claim of vexatious litiga-
tion, we need not determine whether the trial court properly found that the
element of malice was not proved.
2
In its December 18, 2013 decision, the court, Hon. Robert F. Stengel,
judge trial referee, found that Unifund was in the business of purchasing
distressed consumer debt. T&M had provided legal representation to Unifund
since 1999 and had handled a significant number of collection cases on
behalf of Unifund.
3
Notably, the report provides in relevant part: ‘‘[Unifund] and the [plain-
tiffs] agree that the [plaintiffs] entered into an agreement with AT&T Univer-
sal on July 13, 1992 and were issued an AT&T Universal Credit Card with
the account number [in question] . . . . The parties do not dispute that the
[plaintiffs] used the credit card and made purchases thereon. As of August
29, 2002, the [plaintiffs] owed AT&T Universal $9,382.05.’’
4
The judgment lien stated in relevant part: ‘‘[Unifund] . . . did obtain a
judgment in its favor against [the plaintiffs] . . . for the sum of $9,382.05
principal damages, plus prejudgment interest as awarded by the court, and
costs of suit, upon which judgment remains a principal balance, in addition
to interest which continues to accrue at the statutory rate . . . .’’
5
General Statutes § 52-568 provides: ‘‘Any person who commences and
prosecutes any civil action or complaint against another, in his own name
or the name of others, or asserts a defense to any civil action or complaint
commenced and prosecuted by another (1) without probable cause, shall
pay such other person double damages, or (2) without probable cause, and
with a malicious intent unjustly to vex and trouble such other person, shall
pay him treble damages.’’
6
Probable cause, of course, can be lost during the course of an action.
See, e.g., DeLaurentis v. New Haven, 220 Conn. 225, 248, 597 A.2d 807
(1991) (there may be liability for vexatious ‘‘initiation, continuation or
procurement of civil proceedings’’ [emphasis added; internal quotation
marks omitted]).
7
The plaintiffs also claim that T&M is precluded by the doctrines of
collateral estoppel and res judicata from arguing the existence of probable
cause. They contend that because Judge Miller ruled in 2008, in the course
of denying the motion for clarification, that T&M should have been aware
that the judgment in the debt collection action did not contain an amount
of debt, T&M is now barred from relitigating the issue of probable cause.
‘‘Res judicata or claim preclusion prevents a litigant from reasserting a
claim that has already been decided on the merits. Collateral estoppel, or
issue preclusion, prevents a party from relitigating an issue that has been
determined in a prior suit. . . . Res judicata, or claim preclusion, is distin-
guishable from collateral estoppel, or issue preclusion. Under the doctrine
of res judicata, a final judgment, when rendered on the merits, is an absolute
bar to a subsequent action, between the same parties or those in privity with
them, upon the same claim. . . . In contrast, collateral estoppel precludes a
party from relitigating issues and facts actually and necessarily determined
in an earlier proceeding between the same parties or those in privity with
them upon a different claim.’’ (Citations omitted; internal quotation marks
omitted.) Milford v. Andresakis, 52 Conn. App. 454, 460, 726 A.2d 1170,
cert. denied, 248 Conn. 922, 733 A.2d 845 (1999).
The trial court has made no ruling regarding these doctrines; thus, the
claim is not reviewable. See, e.g., Koehm v. Kuhn, 18 Conn. App. 313, 314
n.2, 557 A.2d 933 (1989). We note, however, that the doctrines of res judicata
and collateral estoppel are inapplicable. Judge Miller never made a ruling
in the foreclosure action as to the merits of the issue of probable cause in
the plaintiffs’ vexatious litigation claim. Even if the trial court were to have
done so, such a ruling would be dicta, because the issue of probable cause
was not before the court. An ultimate adverse ruling is a separate question
from whether it was reasonable, however forlornly, to pursue the ultimately
losing cause.
8
The plaintiffs apparently seek to argue that T&M lacked probable cause
in the foreclosure action because the judgment in the debt collection action
was not a ‘‘full and final judgment’’ and thus not a valid judgment on which
to foreclose. An attorney in T&M’s position reasonably could have taken
into consideration the fact that this court in fact considered the merits of
an appeal from the same judgment and did not dismiss the appeal for lack
of a final judgment. See Unifund CCR Partners v. Schaeppi, supra, 126
Conn. App. 370. The relevant inquiry is what an attorney reasonably would
know at the time the action was taken. See Embalmers’ Supply Co. v.
Giannitti, supra, 103 Conn. App. 35.
9
We by no means encourage or approve of the approach actually taken by
T&M. We do recognize, however, that judgment awards may be ascertainable
from underlying records and that our policy, as stated previously, appears
to avoid penalizing creativity.
10
In denying [Unifund’s motion for clarification] Judge Miller stated:
‘‘Clearly, the judgment should not have been allowed to enter without a
finite dollar amount. This is something which [T&M] should have picked
up on at several readily definable points in the process, the first of which
being upon seeing the decisions, there isn’t a dollar amount.’’
11
The court concluded that T&M had probable cause to pursue the action
until its appeal from the denial of the motion to open.
12
We agree with T&M that there was probable cause to pursue the motion
to open on the ground of mutual mistake. We express no opinion as to
whether the alternative ground, regarding weekly payments, was supported
by probable cause.
13
On the facts that appear in the record, it is not entirely implausible to
posit that both sides had thought that the amount of the judgment was
sufficiently ascertainable at the time of its entry.
14
Section 52-263 provides: ‘‘Upon the trial of all matters of fact in any
cause or action in the Superior Court, whether to the court or jury, or before
any judge thereof when the jurisdiction of any action or proceeding is vested
in him, if either party is aggrieved by the decision of the court or judge
upon any question or questions of law arising in the trial, including the
denial of a motion to set aside a verdict, he may appeal to the court having
jurisdiction from the final judgment of the court or of such judge, or from
the decision of the court granting a motion to set aside a verdict, except
in small claims cases, which shall not be appealable, and appeals as provided
in sections 8-8 and 8-9.’’