First Constitution Bank v. Harbor Village Ltd. Partnership

Foti, J. This matter is before us on remand from our Supreme Court; First Constitution Bank v. Harbor Village Ltd. Partnership, 230 Conn. 807, 822, 646 A.2d 812 (1994); for our consideration of the plaintiff’s remaining two claims. See First Constitution Bank v. Harbor Village Ltd. Partnership, 31 Conn. App. 15, 622 A.2d 1063 (1993).1 The plaintiff claims that the trial court improperly (1) failed to find that its mortgage had priority over the mechanic’s lien filed by Fairfield Dock Company, Inc. (Fairfield), under the doctrine of equitable subrogation, and (2) upheld the validity of Fair-field’s mechanic’s lien. — 700 — The following facts are relevant to the plaintiffs claim of equitable subrogation. On June 18, 1987, the Mechanics and Farmers Bank (M&F) loaned the defendant Harbor Village Limited Partnership (Harbor Village) the sum of $11,451,500; the loan was secured by a mortgage. On December 29, 1988, First Constitution Bank (FCB), the plaintiffs predecessor in interest, loaned Harbor Village the sum of $11,451,500 enabling the defendant to pay off the M&F loan. The mortgage was released that same day. Also on that day, M&F issued a letter of credit in the amount of $11,451,500 to FCB as security for the loan, with the letter of credit being secured by a mortgage from Harbor Village to M&F in that amount. As of that date, FCB had no mortgage to secure its loan. Its only security was the letter of credit from M&F. On May 8,1989, Harbor Village and William O. Rockwood, Jr., trustee (Rockwood), executed a promissory note to FCB for $21,500,000 and the sum of $11,451,500 was advanced, enabling Harbor Village to pay off the first FCB loan. The second M&F mortgage was released on May 8, 1989, and the letter of credit was to be returned to M&F. FCB never called the letter of credit; M&F never paid any moneys pursuant to that letter of credit. Also, on May 8,1989, Harbor Village, in order to secure the FCB loan in the amount of $21,500,000, granted a mortgage to FCB. This is the mortgage that First Marine Corporation2 sought to foreclose. The trial court found that until May 8, 1989, when Harbor Village granted the mortgage to FCB, FCB was looking to the letter of credit issued by M&F as security for its loan, not to the property. The court noted that at the time that FCB loaned the sum of $11,451,500 to Harbor Village on December 29,1988, FCB did not take a mortgage from Harbor Village as — 701 — security for that loan. The sole security for the loan was the letter of credit from M&F, which in turn took a mortgage to secure any payments that might have been made pursuant to the letter of credit. The court concluded that FCB had not advanced money to discharge a prior lien on the property and did not take a new mortgage as security. Therefore, because the plaintiffs predecessor in interest had no equitable interest in the property, the court denied the plaintiffs claim that it was entitled to equitable subrogation.3 The plaintiff argues that it should be entitled to priority over Fairfield’s mechanic’s lien because, although it paid off its own bridge loan for which it held no mortgage on the property, it should somehow step into or relate back to M&F’s position, which had a mortgage to secure repayment on the letter of credit. We do not agree. We start by noting, as the trial court did, that the letter of credit was never called and never funded, and we agree that the loan paid off was not M&F’s loan, as M&F had never advanced money under its mortgage. The court’s findings show that in December, 1988, FCB, not M&F, loaned Harbor Village the “bridge loan.” That loan was secured by a letter of credit in favor of FCB in the same amount issued by M&F. M&F thereafter recorded its mortgage deed to secure the repayment of amounts that it might advance pursuant to its letter of credit. Since Harbor Village did not default, the letter of credit was never called and M&F made no advance; FCB had no cause to draw on the M&F letter of credit. No advances were made on the 1988 M&F mortgage. — 702 — We concluded that since no advances were made, the plaintiffs claim of equitable subrogation attempting to relate back to the 1988 M&F mortgage is without merit. The plaintiffs reliance on Home Owners’ Loan Corp. v. Sears, Roebuck & Co., 123 Conn. 232, 193 A. 769 (1937), for the application of the doctrine of equitable subrogation is misplaced. Since no relating back is available, there is no mortgage position to which the plaintiff can be subrogated. The plaintiff next claims that the trial court improperly determined that the mechanic’s lien was not invalid because Fairfield failed to name the parties to its mechanic’s lien foreclosure in the lis pendens. The plaintiff argues that General Statutes § 52-3254 expressly requires that the notice of lis pendens set forth the name of the parties, and, absent the subsequent recording of a notice of lis pendens and the commencement of a foreclosure within one year after the recording of the certificate of lien, a mechanic’s lien expires as a matter of law. The plaintiff claims that since Fairfield’s notice of lis pendens names only the plaintiff and omits alleged subsequent encumbrancers, it is plainly defective and therefore invalid, resulting in a corresponding extinguishment, as a matter of law, of the mechanic’s lien. The plaintiff argues that the naming of all the par — 703 — ties is mandatory, and the reference “et al.” is insufficient as a legal phrase to validate the lis pendens. We do not agree. The record discloses that the notice of lis pendens was recorded on March 28, 1991, within the one year period that commenced on April 16, 1990. The record also discloses that the case caption of the lis pendens states: “Fairfield Dock Company, Inc. v. Harbor Village Limited Partnership, Market Corp. Real Estate, Inc., Trustee, et al.” The lis pendens also contains the return date and court, thus allowing an interested party to view the full summons and complaint that lists every party in detail. In the present matter, we need not determine whether the name of every defendant be indicated on a lis pendens in order that a mechanic’s lien not be invalidated. A notice of lis pendens is appropriate where the pending action will in some way, either directly or indirectly, affect the title to or an interest in the real property itself. Garcia v. Brooks Street Associates, 209 Conn. 15, 22, 546 A.2d 275 (1988). A lis pendens is a creature of statute and a person invoking its provisions must comply with the statutory requirements. H & S Torrington Associates v. Lutz Engineering Co., 185 Conn. 549, 553, 441 A.2d 171 (1981). “Nevertheless, the provisions of the statute should be liberally construed to implement reasonably and fairly its remedial intent of giving notice of claims pertaining to the real property which is the subject of the litigation.” Manaker v. Manaker, 11 Conn. App. 653, 660-61, 528 A.2d 1170 (1987). “The purpose of the lis pendens in the context of a mechanic’s lien is the same as it is in any other situation in which real property is the subject of litigation; namely, it is intended to give constructive notice to persons seeking to purchase or encumber property after the recording of a lien or the commencement of a foreclosure suit. . . . Thus, if a person has — 704 — actual notice of the lien and a suit commenced thereon, that actual notice may take the place of constructive notice imparted by the filing of a lis pendens. . . . To hold otherwise would exalt constructive notice over actual notice.” (Citations omitted; internal quotation marks omitted.) Meyer, Kasindorf & Mancino v. Lafayette Bank & Trust Co., 34 Conn. Sup. 84, 86-87, 377 A.2d 861 (1977). “The doctrine underlying lis pendens is that a person who deals with property while it is in litigation does so at his peril .... [I]f the power of the courts to determine the rights of the parties to real property could be defeated by its transfer, [during the pendency of litigation], to a purchaser without notice, additional litigation would be spawned and the public’s confidence in the judicial process could be undermined.” (Citations omitted; internal quotation marks omitted.) Williams v. Bartlett, 189 Conn. 471, 480, 457 A.2d 290, appeal dismissed, 464 U.S. 801, 104 S. Ct. 46, 78 L. Ed. 2d 67 (1983). Since the filing of notice of lis pendens is not a condition precedent to a right of action; Meyer, Kasindorf & Mancino v. Lafayette Bank & Trust Co., supra, 34 Conn. Sup. 87; and since the plaintiff, or its predecessor, had actual notice of the action for foreclosure of the mechanic’s lien,5 Fairfield’s lien is not invalid to this plaintiff. The plaintiff suffered no prejudice even if the notice of lis pendens did not “contain the names of the parties.” As our Supreme Court has recently said, in validating this lien in this matter, despite claimed errors on the face of the lien certificate where the mistake was made in good faith and no resulting — 705 — prejudice was claimed, “ 'we do not think a court of equity can be called upon to declare [a] lien utterly void upon the motive of persons who have lost nothing by [the] mistake.’ ” First Constitution Bank v. Harbor Village Ltd. Partnership, supra, 230 Conn. 816. Because the plaintiff can show no prejudice, even if the notice of lis pendens should be invalid, its application to discharge the defendant’s mechanic’s lien on this basis was properly denied. The judgment is affirmed. In this opinion Lavery, J., concurred. Footnotes [1] The underlying facts may be found in First Constitution Bank v. Harbor Village Ltd. Partnership, supra, 230 Conn. 807. Additional facts will be set forth as required. [2] The substitute plaintiff, First Marine Corporation, appealed as successor in interest to FCB; we refer to First Marine Corporation as the plaintiff. [3] Equitable subrogation is a doctrine borrowed from the civil law and administered so as to secure justice without regard to form or mere technicality. Home Owners’Loan Corp. v. Sears, Roebuck & Co., 123 Conn. 232, 238, 193 A. 769 (1937). [4] General Statutes § 52-325 provides in relevant part: “notice of lis pendens, (a) In any action in a court of this state or in a court of the United States (1) the plaintiff or his attorney, at the time the action is commenced or afterwards, or (2) a defendant, when he sets up an affirmative cause of action in his answer and demands substantive relief at the time the answer is filed, if the action is intended to affect real property, may cause to be recorded in the office of the town clerk of each town in which the property is situated a notice of lis pendens, containing the names of the parties, the nature and object of the action, the court to which it is returnable and the term, session or return day thereof, the date of the process and the description of the property .... This section shall be construed to apply to mechanics’ liens . . . .” [5] The plaintiff acknowledges that its predecessor, FCB, was named as a defendant in the foreclosure action. The issue of actual notice was raised by the defendant and was argued. The defendant’s brief stated that “all parties named in the action received service of the complaint, thus giving them actual notice.”