JAMES C. LESTORTI v. RALPH J. DELEO et al., SC 18393

Judicial District of Hartford

 Suretyship; Guaranty; Unjust Enrichment; Whether Defendant was Entitled to Equitable Contribution from Co-Guarantor of Note. The plaintiff brought his action against Louis A. Lestorti, Jr. (the defendant), and others claiming damages for, among other things, fraud.  The defendant counterclaimed, alleging a cause of action for equitable contribution.  The counterclaim stemmed from an agreement between the plaintiff and the defendant to guarantee a note secured by a mortgage.  On the default of the note, both the plaintiff and the defendant were named as defendants to an ensuing foreclosure action by virtue of their liability on the guaranty.  While the foreclosure action was dismissed as to the plaintiff because he was not properly served, the defendant was found liable and paid the foreclosing party $275,000 in settlement by way of a stipulated deficiency judgment.  In his counterclaim in this action, the defendant alleged that the plaintiff, as a joint obligor under the guaranty of the note, was liable to him for $137,500, which he claimed was the plaintiff's proportionate share of the deficiency payment.  The trial court struck the counterclaim, finding that the defendant had no right to equitable contribution from the plaintiff, and the Appellate Court (114 Conn. App. 50) affirmed.  The Appellate Court found that, as the foreclosing party's failure to obtain jurisdiction over the plaintiff by properly serving him in the foreclosure action extinguished that party's right to recover from the plaintiff, the defendant's subsequent payment in settlement of the deficiency did not satisfy an obligation that the plaintiff owed.  The Appellate Court also noted that, to the extent that the defendant's payment was considered a payment on behalf of both guarantors, the payment was gratuitous and was in any case less than the defendant's own proportionate share of the obligation on the note, which at the time of the deficiency judgment exceeded $1 million.  Finally, the Appellate Court held that the defendant was not entitled to restitution pursuant to a theory of unjust enrichment because the plaintiff owed nothing at the time of the defendant's payment and therefore was not enriched by that payment.  The Supreme Court will now decide whether the Appellate Court properly affirmed the decision striking the

defendant's counterclaim for equitable contribution.