First Am. Title Ins. Co. v. 273 Water St., LLC

• Citation: 157 Conn.App. 23,117 A.3d 857
• Decision Date: 05 May 2015
• Docket Number: No. 35882.,35882.
• Court: Appellate Court of Connecticut
• Parties: FIRST AMERICAN TITLE INSURANCE COMPANY v. 273 WATER STREET, LLC, et al.

157 Conn.App. 23

117 A.3d 857

FIRST AMERICAN TITLE INSURANCE COMPANY

v.273 WATER STREET, LLC, et al.

No. 35882.

Appellate Court of Connecticut.

Argued Oct. 23, 2014.

Decided May 5, 2015.

Courtney G. Saleski, pro hac vice, with whom were Benjamin Berger and, on the brief, David R. Makarewicz and Richard M. Kremen, pro hac vice, for the appellant (plaintiff).

Wesley W. Horton, with whom were Brendon P. Levesque and, on the brief, Karen L. Dowd, Hartford, for the appellees (defendants).

LAVINE, BEACH and KELLER, Js.

Opinion

BEACH, J.

In this declaratory judgment action, the plaintiff, First American Title Insurance Company, appeals from the judgment, rendered after a jury trial, in favor of the defendant developers, 273 Water Street, LLC, and Fenwick Acquisition, LLC. The plaintiff claims that (1) the defendants lacked standing to pursue, and the trial court lacked subject matter jurisdiction to hear, their counterclaims; (2) the trial court abused its discretion with respect to several evidentiary rulings; and (3) the court abused its discretion in denying its motion to set aside or to reduce the verdict. We affirm the judgment of the trial court.

The following facts, which reasonably could have been found by the jury, and procedural history are relevant. On September 27, 2004, the defendants purchased the subject property for $6 million. The property, consisting of approximately 3.5 acres, had been the beachfront summer home of actress Katharine Hepburn. The property was located in the town of Old Saybrook and the Borough of Fenwick (borough). The property had 600 feet of frontage on Long Island Sound and was bordered on one side by a pond and on another by a land trust. The subject property previously had been larger, but prior to the sale of the property to the defendants, the Hepburn estate donated the eastern portion of the property to a land trust.

When the defendants purchased the property, they also purchased a title insurance policy (policy) from the plaintiff. The defendants subdivided the property into three lots. The house was on the center lot. There had been plans to build smaller houses on the easterly and westerly lots to create a family compound. The three lots were on the market at the time of trial for a total asking price of $30 million.

Shortly after the defendants began renovating the property, an official from the borough notified the defendants, by letter dated February 18, 2005, that the borough claimed ownership of a thirty foot wide discontinued road. The road ran from Mohegan Avenue, through part of the property's driveway, over a portion of the lawn, and ended at a waterfront rock jetty. The parties agreed that February 18, 2005, constituted the date of loss under the title insurance policy.

On August 15, 2007, the defendants submitted a claim to the plaintiff title insurance company. The plaintiff approved the claim and issued a check to the defendants in the amount of $17,000 on October 8, 2008. The defendants refused to accept the check because, in the defendants' opinion, the loss amounted to approximately $5 million.

In November, 2008, the plaintiff initiated this action plaintiff sought a declaration that its obligations under the policy would be satisfied by a payment of $40,000 or less. The defendants filed a counterclaim alleging breach of contract and breach of the implied covenant of good faith and fair dealing, and sought a counter-declaratory judgment without a limit on the amount of recovery.

During the course of litigation, in March, 2010, the parties negotiated with the borough and reached an accommodation regarding the road. The borough agreed to convey fee title to the thirty foot discontinued road to the defendants, who in turn conveyed to the borough a limited six foot wide easement in the same area. The easement allowed access residents of the borough by foot and by bicycle between the hours of 5 a.m. and midnight. Running along the eastern side of the east lot next to the land donated to the land trust, the easement was approximately eighty yards from the house. It was a footpath that was not marked, maintained or advertised, but was used by some people.

The case was tried. A jury returned a verdict in favor of the defendants on their counterclaim for breach of contract and for a declaratory judgment. The jury awarded the defendants $2.2 million in damages. The jury found against the plaintiff on its request for a declaratory judgment and found against the defendants on their counterclaim alleging breach of the implied covenant of good faith and fair dealing. The plaintiff filed a motion to set aside or to reduce the verdict, which the trial court denied. The court rendered judgment in accordance with the jury's verdict, plus costs. This appeal followed. Additional facts will be set forth as necessary.

I

The plaintiff first claims that the defendants lacked standing to pursue, and thus the trial court lacked subject matter jurisdiction to hear, their counterclaims. It argues that the court erred in denying its motion to dismiss, which claimed lack of standing. We disagree.

“It is well established that [i]f a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause.... A determination regarding a trial court's subject matter jurisdiction is a question of law. When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record.... [S]tanding is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.” (Citation omitted; internal quotation marks omitted.)

Perry v. Perry, 312 Conn. 600, 626–27, 95 A.3d 500 2014 ). “A determination regarding a trial court's subject matter jurisdiction is a question of law. When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record.” (Internal quotation marks omitted.) Fairchild Heights Residents Assn., Inc. v. Fairchild Heights, Inc., 310 Conn. 797, 821, 82 A.3d 602 (2014). “The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss. Practice Book § [10–30(a) ].” (Internal quotation marks omitted.) McWeeny v. Hartford, 287 Conn. 56, 63, 946 A.2d 862 (2008).

The following additional undisputed facts and procedural history are relevant. On May 23, 2011, the defendants transferred the easterly portion of the property, which contained the easement, by quitclaim deed to A Piece of Paradise, LLC (Paradise).¹ The plaintiff moved to dismiss the defendants' counterclaims on the ground that the defendants lacked standing, because the portion of the property containing the easement (easterly lot) had been transferred to a third party, Paradise, thereby terminating the policy as to that portion of the property. The court denied the motion to dismiss and concluded that the defendants had standing to bring their counterclaims. The court noted that, pursuant to the unambiguous language of the policy, relevant coverage ended on May 23, 2011, when the defendants conveyed title to the easterly lot to Paradise. The defendants submitted the claim to the plaintiff in August, 2007. The court reasoned that the policy was ambiguous as to the intention of the parties concerning preexisting claims for damages allegedly incurred prior to the termination of the policy, and any ambiguity was to be resolved in favor of the insured. Claims arising during the policy period, then, were not necessarily defeated by a subsequent transfer of property to a third party.

Paragraph 7 of the policy provided: “This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the insured claimant who has suffered loss or damage by reason of matters insured against by this policy....” The policy provided for title insurance coverage against “loss or damage ... incurred by the insured by reason of ... any defect in or lien or encumbrance on the title....” Paragraph 2 provided: “The coverage of this policy shall continue in force as of the Date of Policy in favor of an Insured only so long as the Insured retains an estate or interest in the land....” The policy defined “insured” as “the Insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributes, devisees, survivors, personal representatives, next of kin, or corporate fiduciary successors.” Schedule A named the defendants as the insureds.

It is undisputed that policy coverage as to the lot encumbered by the easement ended when the defendants conveyed title to the easterly lot to Paradise on May 23, 2011, and as of that date the defendants no longer “retain[ed] an estate or interest in the land” under paragraph 2. The policy provided for coverage to the insured defendants for “actual monetary loss or damage ... incurred by the insured by reason of ... any defect in ... title” during the policy period. It is also undisputed that the defendants, who purchased the policy in September, 2004, were covered by the policy when the plaintiff was notified, on February 18, 2005, that the borough claimed ownership to the thirty foot wide discontinued road on the easterly side of the property. The parties dispute whether, in this scenario, the defendants suffered an “actual loss” within the policy period, and, thus, whether they were harmed such that they had standing to...