Kim v. Magnotta

Decision Date01 June 1999
Docket Number(SC 15995)
Citation733 A.2d 809,249 Conn. 94
PartiesYEONG GIL KIM ET AL. v. DOMINICK MAGNOTTA ET AL.
CourtConnecticut Supreme Court

Callahan, C. J., and Borden, Norcott, McDonald and Peters, Js. Edward T. Krumeich, for the appellants (plaintiffs).

Stanley S. Zinner, pro hac vice, with whom was Howard I. Gemeiner, for the appellee (named defendant).

Opinion

PETERS, J.

This certified appeal raises issues that are at the crossroads of the remedial provisions of the Connecticut Unfair Trade Practices Act (CUTPA); General Statutes §§ 42-110b and 42-110g;1 and the four month limitation period for opening judgments contained both in General Statutes § 52-212a and Practice Book § 17-4.2 The specific question is whether a trial court, having accepted a jury verdict that a stipulated judgment in a prior action between the parties resulted from a CUTPA violation, but not from fraud,3 has the authority to set the judgment aside after the expiration of the four month limitation period contained in § 52-212a. We conclude that the trial court has discretion to exercise such authority.

The plaintiffs, Yeong Gil Kim and Hi-Soon Seo Kim, brought this multicount action charging the named defendant, Dominick Magnotta (defendant),4 with various common-law and statutory violations, including fraud, theft in violation of General Statutes § 52-5645 and unfair trade practices in violation of CUTPA.6 The plaintiffs claimed that the defendant had engaged in improper practices both in initially selling them a car wash business in Branford and, when that car wash subsequently turned out to be unprofitable, in negotiating with them about the terms of a stipulated judgment in a prior case. The defendant denied the plaintiffs' claims and asserted affirmative defenses of res judicata and collateral estoppel.7

With the consent of the parties, the trial court bifurcated the case to have a jury decide the liability issues and the court decide the remedial issues. The jury returned a verdict in favor of the defendant on the counts of fraud and theft, and in favor of the plaintiffs on the CUTPA count. The merits of that verdict are not before us.8 The court not only accepted the jury's verdict but found, sua sponte, that the plaintiffs had adduced no evidence of duress, accident or mistake. Although the court awarded the plaintiffs $483,000 as restitution, as well as $80,000 for attorney's fees, the court denied their request to rescind the stipulated judgment in the prior case because the four month period of § 52-212a had expired.

A divided Appellate Court affirmed the judgment. Kim v. Magnotta, 49 Conn. App. 203, 215, 714 A.2d 38 (1998). Judge Lavery dissented from the majority opinion insofar as it affirmed the denial of the plaintiffs' request for rescission of the stipulated judgment. Id. We granted the plaintiffs' petition for certification to appeal, limited to the following issue: "Under the circumstances of this case, did the Appellate Court properly affirm the judgment of the trial court that it lacked jurisdiction to order rescission of the stipulated agreement between the parties?" Kim v. Magnotta, 247 Conn. 905, 720 A.2d 514 (1998). We now reverse the judgment of the Appellate Court.

I FACTUAL AND PROCEDURAL HISTORY

The jury rendered a verdict in favor of the plaintiffs only on their CUTPA claim. In support of its verdict, the jury reasonably might have found the following facts. On December 5, 1989, the plaintiffs purchased the Branford Carwash from the defendant.9 The total purchase price was $903,000, of which the plaintiffs paid $453,000 in cash at the time of the closing. They also executed a promissory note for the remaining $450,000 payable to the defendant over a ten year period. In addition, the plaintiffs were required to give the defendant a security interest in the assets of the car wash and to become the defendant's lessees for twenty-five years with respect to the underlying real property. The purchase agreement, the promissory note, the security interest and the lease were all linked together by provisions for cross default, in which default on any one of the plaintiffs' obligations would become a default on the others.

In the course of the negotiations for the car wash purchase, the defendant, or those speaking on his behalf, made numerous misrepresentations about the profitability of the business. The plaintiffs were unable to test the reliability of these representations because, according to the defendant, he conducted his business on a cash basis and, therefore, could produce no supporting documentation.

Unable to run the car wash profitably, the plaintiffs soon defaulted on their monetary obligations to the defendant. In response, the defendant filed a summary process action to evict them from the car wash and to obtain a judgment on their promissory note.

To settle these claims, the parties agreed both to a stipulated judgment on the promissory note and to other terms outside the four corners of the stipulated judgment. On July 3, 1991, in return for a $30,000 credit against their monetary obligations to the defendant, the plaintiffs agreed to return to the defendant the Branford car wash and the secured personal property that it contained. The plaintiffs also agreed, on July 8, 1991, to execute a stipulated judgment in favor of the defendant for $436,763.49, the plaintiffs' remaining indebtedness on the promissory note, as well as $294.10 for costs and $11,854.69 for unpaid rent. The written settlement agreement made no reference to the defendant's promise to pay the plaintiffs' attorney's fees or to a letter that the defendant had signed, on July 1, 1991, in which he had promised to transfer a Hamden car wash to the plaintiffs as soon as he had obtained the required approvals of two named banks.

The motion for entry of judgment in accordance with the parties' stipulation was granted on July 29, 1991. The defendant never fully performed the settlement to which he had agreed. The defendant did not pay the plaintiffs' attorney's fees. More importantly, despite a request from the plaintiffs on September 3, 1991, the defendant never transferred the Hamden car wash to them. Instead, on November 15, 1991, the defendant filed a voluntary petition for bankruptcy of the Hamden car wash.

As a result, on December 4, 1992, more than one year after the stipulated judgment had been entered, the plaintiffs brought the present action. After the jury verdict in their favor on the CUTPA claim, they sought relief by way of restitution and rescission, not only for the moneys they had paid the defendant but also for rescission of the stipulated judgment. The trial court granted them monetary relief, but declined to rescind the stipulated judgment because the plaintiffs had not filed a motion to open that judgment within the four month limitation period contained in § 52-212a. We granted certification to examine the merits of the trial court's judgment, which the Appellate Court had affirmed. Kim v. Magnotta, supra, 49 Conn. App. 215.

II THE CERTIFIED ISSUE

The issue that we certified is as follows: "Under the circumstances of this case, did the Appellate Court properly affirm the judgment of the trial court that it lacked jurisdiction to order rescission of the stipulated agreement between the parties?" Kim v. Magnotta, supra, 247 Conn. 905. We stated the issue as jurisdictional in its nature.

We have often used jurisdictional terms to describe the four month limitation period for opening judgments that is contained in § 52-212a. Our syllogism has been as follows: (1) a court's jurisdiction over the subject matter cannot be waived; (2) § 52-212a permits waiver of the four month limitation period; (3) accordingly, the four month period does not implicate the court's subject matter jurisdiction; (4) nonetheless, § 52-212a refers to continuing jurisdiction; (5) if the reference to jurisdiction in § 52-212a does not implicate subject matter jurisdiction, it must instead implicate personal jurisdiction; (6) § 52-212a, therefore, must have been intended to relate to personal jurisdiction over the parties. See, e.g., In re Baby Girl B., 224 Conn. 263, 288-91, 618 A.2d 1 (1992); Van Mecklenburg v. Pan American World Airways, Inc., 196 Conn. 517, 518, 494 A.2d 549 (1985).

We are now persuaded that it is confusing to describe the four month limitation period in § 52-212a as implicating a court's personal jurisdiction over the parties to a motion to open a judgment, because, under our case law, lack of personal jurisdiction generally means something else. "[T]he Superior Court ... may exercise jurisdiction over a person only if that person has been properly served with process, has consented to the jurisdiction of the court or has waived any objection to the court's exercise of personal jurisdiction." (Citations omitted.) Commissioner of Environmental Protection v. Connecticut Building Wrecking Co., 227 Conn. 175, 195-96, 629 A.2d 1116 (1993); see Practice Book §§ 10-31 and 10-32. "Because a lack of personal jurisdiction may be waived by the defendant, the rules of practice require the defendant to challenge that jurisdiction by a motion to dismiss." Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 53, 459 A.2d 503 (1983); see Knipple v. Viking Communications Ltd., 236 Conn. 602, 606, 674 A.2d 426 (1996). In this case, the defendant challenged the plaintiffs' claims for relief by filing an answer and affirmative defenses. As a result of his failure to file a motion to dismiss and his unconditional participation in the stipulated judgment, the defendant waived any challenge to the court's exercise of personal jurisdiction. Practice Book § 10-32.

The question is whether the legislature intended § 52-212a to provide a litigant an opportunity to revisit the question of personal jurisdiction. We recognize that one of the statutory exceptions to the four month rule in §...

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