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RICHARD SCALISE ET AL. v. EAST

GREYROCK, LLC, ET AL.

(AC 35323)

Alvord, Sheldon and Pellegrino, Js.

Argued November 14, 2013—officially released February 11, 2014

(Appeal from Superior Court, judicial district of

Hartford, Peck, J.)

Kirk D. Tavtigian, Jr., for the appellants (plaintiffs).

Elizabeth M. Cristofaro, with whom, on the brief,

were Lila M. McKinley and Jennifer Katz, forthe appellees (defendants).
Opinion

SHELDON, J. The plaintiffs, Richard Scalise and Eleanor Mihailidis, appeal from the judgment of the trial

court granting the motion of the defendants, East Greyrock, LLC, Greyrock at Oysterbend, LLC, and Jerry

Effren, both as trustee and in his individual capacity,

to dismiss the plaintiffs’ vexatious litigation complaint

on the ground that it is unripe for adjudication. The

plaintiffs argue on appeal that their vexatious litigation

action is ripe for adjudication despite the fact that several counts of the complaint in the underlying action

remain pending, now as when this action was commenced, because the favorable termination requirement has been satisfied as to several of the underlying

claims upon which the present action is based. We

disagree with the plaintiffs and thus affirm the judgment

of the court.

The following facts and procedural history are relevant to our resolution of this appeal. In 2004, the defendants, with the exception of Jerry Effren in his

individual capacity, commenced an action against the

plaintiffs and filed an eighteen count1 complaint in connection with the plaintiffs’ sale to them of a property

that the defendants claimed had been environmentally

contaminated (underlying action).2 Before the start of

trial in the underlying action, the parties entered into

an agreementto arbitrate certain claims and to bifurcate

the proceedings into separate liability and damages

phases, with the arbitrator to hear the liability phase

and the court to hear the damages phase.3 Those claims

were subsequently arbitrated and the arbitrator found

for the plaintiffs on all but three claims and also found

count seventeen to be nonjusticiable. On October 6,

2009, the plaintiffs moved to confirm those arbitration

findings in their favor as well as to modify or vacate

those with which the arbitrator found against them. On

August 2, 2010, the court remanded the case back to

the arbitrator for further proceedings or consideration

of certain issues identified by the court that it believed

the arbitrator had failed to address.4 Thereafter, the

plaintiffs moved forreargument of the motion to vacate,

modify and correct the arbitrator’s award, raising as an

additional ground that the award was insufficient. On

December 1, 2011, the court granted the motion in part

and remanded the case back to the arbitrator.5 Since

that time, no order has been issued by the court confirming or vacating any supplemental award of the arbitrator, nor has any such award been issued by the

arbitrator, nor has the damages phase of the case been

scheduled by the court.

The plaintiffs brought the present vexatious litigation

action in 2011. The defendants filed motions to dismiss

on June 14, 2012, arguing that the plaintiffs’ vexatious

litigation claim was not yet ripe for adjudication

because the underlying action was still pending, the
plaintiffs’ claims had not yet terminated in their favor,

and thus that the court lacked jurisdiction to hear the

claim.6 The court granted the defendants’ motions to

dismiss on January 4, 2013.7 This appeal followed.

We first address the issue of ripeness and the court’s

determination that it lacked subject matter jurisdiction

over the plaintiffs’ action because their claims were not

yet ripe for adjudication. We conclude that the court

ruled properly that the plaintiffs’ claims were not ripe

and that it therefore lacked jurisdiction over the action.

‘‘[I]t is well established that, in determining whether

a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged. . . .

When reviewing an issue of subject matter jurisdiction

on appeal, [w]e have long held that because [a] determination regarding a trial court’s subject matter jurisdiction is a question of law, our review is plenary. . . .

Subject matter jurisdiction involves the authority of the

court to adjudicate the type of controversy presented

by the action before it. . . . [A] court lacks discretion

to consider the merits of a case over which it is without

jurisdiction. . . . The subject matter jurisdiction

requirement may not be waived by any party, and also

may be raised by a party, or by the court sua sponte,

at any stage of the proceedings, including on appeal.’’

(Citations omitted; internal quotation marks omitted.)

Keller v. Beckenstein, 305 Conn. 523, 531–32, 46 A.3d

102 (2012). Further, ‘‘[t]his court does not have jurisdiction to resolve a controversy that is not ripe for adjudication.’’ Bloom v. Miklovich, 111 Conn. App. 323, 336,

958 A.2d 1283 (2008).

‘‘The cause of action for vexatious litigation permits

a party who has been wrongfully sued to recover damages. . . . In Connecticut, the cause of action for vexatious 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 [General

Statutes] § 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.’’

(Internal quotation marks omitted.) Spilke v. Wicklow,

138 Conn. App. 251, 259, 53 A.3d 245 (2012), cert. denied,

307 Conn. 945, 60 A.3d 737 (2013).

Further, ‘‘[a] condition precedent to the institution

of an action for vexatious litigation is that the original

action has terminated unsuccessfully. As our Supreme

Court explained, [w]e have held that a claim for vexatious litigation requires a plaintiff to allege that the

previous lawsuit was initiated maliciously, without

probable cause, and terminated in the plaintiff’s favor.
. . . In suits for vexatious litigation, it is recognized to

be sound policy to require the plaintiff to allege that

prior litigation terminated in his favor.’’ (Emphasis

omitted; internal quotation marks omitted.) Somers v.

Chan, 110 Conn. App. 511, 542, 955 A.2d 667 (2008).

‘‘Thus, for a vexatious litigation claim to be ripe for

adjudication, the party must allege, among other facts,

that the allegedly vexatious litigation has terminated in

its favor.’’ Keller v. Beckenstein, 122 Conn. App. 438,

444, 998 A.2d 838 (2010), rev’d on other grounds, 305

Conn. 523, 46 A.3d 102 (2012). ‘‘This requirement serves

to discourage unfounded litigation without impairing

the presentation of honest but uncertain causes of

action to the courts. . . . The requirement furthermore

serves the interest of finality of judicial decisions, by

preventing a person who was unsuccessful in the original proceeding from relitigating the same issues in a

subsequent action for vexatious litigation.’’ (Citation

omitted; internal quotation marks omitted.) Zeller v.

Consolini, 235 Conn. 417, 424, 667 A.2d 64 (1995).

We conclude that the underlying litigation upon

which the plaintiffs’ vexatious litigation claim is

founded has yet to terminate fully in their favor. The

liability phase of the underlying action remains ongoing

as the court has remanded the action back to the arbitrator for additional findings as to the plaintiffs’ special

defenses, and the damages phase has yet to take place.

Further, because not all of the counts directed against

the plaintiffs were adjudicated by the arbitrator and

confirmed by the court, the underlying litigation is still

subject to the possibility of appeal.8

In addition, there

is no dispute that count seventeen of the underlying

complaint, which alleges that the other corporate entities sued in the underlying action were dissolved and

the plaintiffs were derivatively liable as shareholders

at the time of the dissolution for any liability of the

corporations, remains pending as the arbitrator has yet

to clarify his previous decision as to that count.9

The plaintiffs argue that because some of the claims

in the underlying action have been terminated in their

favor, they properly may proceed with their vexatious

litigation action as to those counts even though the

underlying litigation remains pending as to certain other

counts. There is no legal authority in our jurisprudence,

however, to support such a proposition.10 Granting the

plaintiffs permission to prosecute this action in these

circumstances would undermine the purpose of the

favorable termination requirement, which our Supreme

Court has noted, ‘‘serves to discourage unfounded litigation without impairing the presentation of honest but

uncertain causes of action to the courts.’’ Zeller v. Consolini, supra, 235 Conn. 424. ‘‘Two concerns underlie

the requirement of ‘successful termination.’ The first is

the danger of inconsistent judgments if defendants use

a vexatious suit or malicious prosecution action as a

means of making a collateral attack on the judgment
against them or as a counterattack to an ongoing proceeding. . . . The second is the unspoken distaste for

rewarding a . . . ‘guilty’ party with damages in the

event that the party who instituted the proceeding did

not at that time have probable cause to do so.’’ (Citations omitted.) DeLaurentis v. New Haven, 220 Conn.

225, 251–52, 597 A.2d 807 (1991). ‘‘The question we must

resolve, then, is whether the [termination of the prior

action] implicates either of these concerns.’’ Bhatia v.

Debek, 287 Conn. 397, 410, 948 A.2d 1009 (2008).

Here, if the plaintiffs were permitted to proceed with

their vexatious litigation claim without first satisfying

the favorable termination requirement on all of the

claims raised in the underlying action, both of these

concerns would be implicated. The plaintiffs candidly

concede that the ‘‘defendants are not barred from taking

further action in the underlying lawsuit regarding the

court’s granting of the motion to strike counts five and

thirteen and entering summary judgment as to count

ten, because these counts were not adjudicated by the

arbitrator, and therefore defendants’ ability to challenge

the court’s ruling on appeal is not barred by defendants’

failure to file a motion to vacate.’’ There is no dispute

that the underlying counts one, two, three, six, seven,

eight, nine, eleven, twelve, fourteen, fifteen, sixteen,

and eighteen have terminated in favor of the plaintiffs.

This fact, however, does not permit the plaintiffs to

proceed with their vexatious litigation action without

a final termination in their favor with respect to counts

five, ten, thirteen, and seventeen, all of which still

remain pending. To permit the plaintiffs to do so would

vitiate the purpose of the favorable termination

requirement.

Because the underlying action has not fully terminated in favor of the plaintiffs, as counts five, ten, thirteen, and seventeen remain pending, the plaintiffs are

barred from bringing their vexatious litigation action

until such time as all counts of the underlying action

have terminated fully in their favor. Accordingly, the

court properly granted the defendants’ motions to

dismiss.

The judgment is affirmed.

In this opinion the other judges concurred.

1 The underlying action consisted of the following eighteen counts: fraudulent misrepresentation (count one); fraudulent nondisclosure (count two);

negligent misrepresentation (count three); violations of the Connecticut

Transfer of Establishments Act under General Statutes § 22a-134 (counts

four and five); violation of the Connecticut Unfair Trade Practices Act under

General Statutes § 42-110 et seq. (count six); violation of the Water Pollution

Control Act under General Statutes § 22a-452 (count seven); common-law

indemnification (count eight); private nuisance (count nine); wanton, willful,

and reckless misconduct (count ten); negligence (count eleven); statutory

negligence per se (count twelve); abnormally dangerous or ultra-hazardous

activities (count thirteen); violation of the Common Interest Ownership Act

under General Statutes § 47-264 (count fourteen); violation of the Common

Interest Ownership Act under General Statutes § 47-265 (count fifteen);

piercing the corporate veil (count sixteen); recoupment of distributions of

a dissolved corporation under General Statutes § 33-887 (count seventeen);
and constructive trust (count eighteen). With the exception of count four,

which was asserted only as to nonparties to the present action, each count

was asserted against either Scalise, Mihailidis, or both.

2 On October 6, 2004, the underlying complaint was brought by the defendants, with the exception of Effren in his individual capacity, against the

plaintiffs in the present action and against the nonparties OBC Associates,

Inc., R&G Industries, Inc., Dickmont Realty Associates, and Donald Scalise.

In the underlying action, the defendants alleged that the plaintiffs made

negligent and fraudulent misrepresentations concerning the environmental

condition of the property purchased by the defendants and that the defendants were damaged as a result. On October 21, 2005, the plaintiffs filed a

motion to strike several of the defendants’ claims, including counts one,

two, five, six, ten, eleven, thirteen, fourteen, and fifteen. The court granted

the motion to strike with respect to counts five, ten, and thirteen. Subsequently, the defendants filed an amended complaint on February 22, 2006,

in which they repleaded their recklessness claim (count ten), but permitted

judgment to enter with respect to counts five and eight, noting that they

reserved the right to appeal the court’s ruling striking those counts. On

November 15, 2007, the plaintiffs moved for summary judgment as to several

counts, including the defendants’ repleaded recklessness count ten. On

September 4, 2008, the court granted the plaintiffs’ motion only as to the

defendants’ recklessness count ten.

3 According to the arbitration agreement, the liability phase was to be

adjudicated first by the arbitrator and only questions of law would be reviewable by the court. The agreement further provided that the damages phase

would be tried by the court or a jury, but not by the arbitrator.

4 The court stated that the arbitrator, in consultation with counsel for all

parties, should decide on the form of these further proceedings and that

upon receipt of the arbitrator’s supplemental report or finding, the court

would enter rulings on the parties’ motion to confirm or vacate the award.

The court also noted confusion over the arbitrator’s decision as to count

seventeen, which the arbitrator dismissed on the basis of his finding that

this claim for the recoupment of distributions of a dissolved corporation

was more appropriate for the damages phase of the proceeding, and the

court remanded that issue back to the arbitrator.

5 The arbitrator’s decision with respect to count seventeen was included

in the court’s renewed order for remand.

6 The trial court consolidated the present vexatious litigation action with

a second vexatious litigation action commenced by the plaintiffs against

Cummings & Lockwood, LLC, stemming from the same underlying action.

Cummings & Lockwood, LLC, also moved to dismiss on the same grounds

on February 7, 2013.

7 On March 4, 2013, the court also granted the motion to dismiss filed by

Cummings & Lockwood, LLC. We also decide the plaintiffs’ appeal from

that judgment today. See Scalise v. Cummings & Lockwood, LLC, 148 Conn.

App. 185, A.3d (2014).

8 The defendants preserved their right to appeal counts five and eight,

which were struck by the court priorto arbitration.In addition,the possibility

for appeal remains open as to both the decision on damages that has yet

to be adjudicated as well as the arbitrator and the court’s final findings as

to the liability aspect of the claim. Both parties could seek to appeal either

the arbitrator’s determinations or the court’s findings with respect to the

arbitrator’s determinations.

9 The arbitrator found that General Statutes § 33-887 does not establish

a cause of action, but rather constitutes a means of recovering an award

against a dissolved corporation. Thus, the arbitrator determined that there

was no justiciable question before him, noting that this claim would be raised

in the damages phase of the litigation. The court remanded the question

of the arbitrator’s designation of this count as nonjusticiable back to the

arbitrator, along with the plaintiffs’ claims that he failed to consider their

defenses.

10 The plaintiffs cite to three cases in support of this argument: Janetka

v. Dabe, 892 F.2d 187, 190 (2d Cir. 1989); DeLaurentis v. New Haven, 220

Conn. 225, 597 A.2d 807 (1991); Economy Petroleum Corp. v. Paulauskas,

Superior Court, judicial district of Hartford, Docket No. CV-00-0822116-S

(August 1, 2003) (35 Conn. L. Rptr. 347). These cases, however, do not stand

for the proposition that a plaintiff may proceed with a vexatious litigation

action despite the fact that the underlying litigation remains pending. Rather,

these cases hold that a plaintiff, in limited circumstances, may proceed

with vexatious litigation or malicious prosecution claims when the plaintiff

had prevailed on some, but not all, of the claims in the underlying action.

In each of these cases, however, the underlying action had terminated fully

priorto the plaintiff’s commencement of the vexatious litigation or malicious

prosecution action. Because the plaintiffs’ claims here are not logically
severable, this limited exception to the favorable termination requirement

does not apply. Accordingly, the plaintiffs must satisfy the general rule

requiring the favorable termination of all of the claims raised in their underlying action prior to proceeding with their vexatious litigation claim.