Opinion
No. CV 03-0826983S
March 10, 2004
MEMORANDUM OF DECISION
I
The instant case concerns a dispute over whether a commercial waiver in a promissory note, which waives notice and a hearing for a prejudgment remedy, can be utilized repeatedly after a lawsuit has commenced. The plaintiff, Farmington Savings Bank, filed its complaint, and first issued its writ of attachment on June 26, 2003, together with a summons and direction for attachment, garnishment and/or replevin issued pursuant to commercial waiver against the defendants: American Modular Corporation, LLC; Structus, LLC; John F. Leader; Nicholas J. Ververis; George Hession; John H. Motley and Fred J. Pasqualoni. The matter was returnable on July 22, 2003, and the defendants appeared through counsel on July 23, 2003. On August 13, 2003, August 28, 2003, September 23, 2003, October 1, 2003, October 8, 2003 and. November 12, 2003 the plaintiff issued and served new writs of attachment and garnishment, pursuant to the same commercial waiver, and with new returns dates for each writ. The defendants now move to dissolve these supplemental attachments on the ground that they are not authorized by the prejudgment remedy statutes, and more specifically, by General Statutes § 52-278f. This entire case hinges on the statutory interpretation of the prejudgment remedy statutes.
Section 52-278f states: "Issuance of prejudgment remedy when defendant in commercial transaction has waived notice and a hearing. In an action upon a commercial transaction, as defined in section 52-278a, wherein the defendant has waived his right to a notice and hearing under sections 52-278a to 52-278g, inclusive, the attorney for the plaintiff shall issue the writ for a prejudgment remedy without securing a court order provided that (1) the complaint shall set forth a copy of the waiver; (2) the plaintiff shall file an affidavit sworn to by the plaintiff or any competent affiant setting forth a statement of facts sufficient to show that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any known defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff; and (3) the plaintiff shall include in the process served on the defendant a notice satisfying the requirements of subsections (b) and (c) of section 52-278e." General Statutes § 52-278f.
The defendants do not contest the posture or the validity of their commercial waiver; they agree that they waived their rights to notice and a hearing for the initial prejudgment remedy. What they do contest is the plaintiff's repeated use of the process. The commercial waiver clearly exempts a party from pursuing the required steps to obtain an initial prejudgment remedy as set forth in General Statutes § 52-278c. Indeed, General Statutes § 52-278b states, in part, that "[n]otwithstanding any provision of the general statutes to the contrary, no prejudgment remedy shall be available to a person in any action at law or equity (1) unless he has complied with the provisions of sections 52-278a to 52-278g, inclusive, except an action upon a commercial transaction wherein the defendant has executed a waiver as provided in section 52-278f . . ."
The prejudgment remedy line of statutes originally included § 52-281 entitled "order for attachment on plaintiff's application during pendency of action," which was repealed in 1976 by Public Act 76-401. However, to provide an historical context to their argument, the defendants utilize the statute and its background to argue that supplemental attachments are not permitted under the current line of statutes. In their argument, the defendants maintain that the General Assembly specifically prohibited supplemental attachments in its 1973 amendment to the legislation concerning prejudgment remedies (Public Acts 1973, No. 73-431) and the Assembly has never altered that position. (Motion to Dissolve Certain Attachments and Garnishments, September 16, 2003, pp. 2-3.) They cite the court in Levin v. Turner, 31 Conn. Sup. 122, 124, 324 A.2d 276 (1974), which stated that "[i]t is apparent that the General Assembly, by enacting Public Act 73-431, intended to prohibit supplemental attachments under § 52-281. This was an obvious response to the recent decisions of the federal courts, nullifying such liens, obtained ex parte, and without notice to a defendant, and an opportunity to be heard . . . This conclusion must stand, whether the petition is initiated by ex parte application, pursuant to the prior practice under § 52-281, or, as plaintiff attempted herein, by a motion to show cause, with notice to the defendants appearing in the present case. The short answer is that § 52-281 does not provide for a hearing on a motion to show cause, such as the one filed herein by the plaintiff. Absent this provision, the plaintiff's attempt to insert such a procedure, pursuant to his motion, must fail. Unless the statutes clearly permit a supplemental attachment of real estate, and specifically provide the detailed and valid mechanics thereof, there can be no constitutional supplemental attachment." (Citations omitted.) Levin v. Turner, supra, 31 Conn. Sup. 124.
Section 52-281 stated: "Order for attachment on plaintiff's application during pendency of action. The plaintiff in any action which was or might have been commenced by attachment may, at any time during its pendency, apply in writing to the court to which it was brought, or, when such court is not in session, to any judge thereof, for an order for the attachment or further attachment of the estate of the defendant; and the court or judge may, at its or his discretion, issue such an order, directed to a proper officer, stating the amount to be attached, and the time of return, which shall not be later than during the next term or session of such court; which order shall be served and returned in the same manner as an original writ of attachment and when returned shall become a part of the files and record in the action. The estate attached under such order shall be held to respond to the final judgment or decree in the same manner as if attached at the commencement of the action." General Statutes § 52-281 (repealed).
Section 52-278f was modified in 1991 by Public Acts 1991, No. 91-315 and again in 1993 by Public Acts 1993, No. 93-431, however, these amendments only added the requirement that the plaintiff set forth facts concerning the existence of probable cause. Section 52-278h, enacted in 1975 (Public Acts 1975, No. 75-459), states that "[t]he provisions of this chapter shall apply to any application for prejudgment remedy filed by the plaintiff at any time after the institution of the action, and the forms and procedures provided therein shall be adapted accordingly." (Emphasis added.) General Statutes § 52-278h. This section does not pertain to a supplemental remedy, but rather pertains to the timing of the remedy. See Brookfield v. Greenridge, Inc., 35 Conn. Sup. 49, 51, 393 A.2d 1316 (1977).
On the other hand, the plaintiff argues that Judge Teller's opinion in Fleet Bank, N.A. v. Central Realty Associates, Superior Court, judicial district of Hartford, Docket No. CV 96 0557010 (January 7, 1998, Teller, J.) ( 21 Conn. L. Rptr. 174), is on point and dispositive of the issue. (Memorandum in Opposition to Defendants' Motion to Dissolve Certain Attachments and Garnishments, September 24, 2003, pp. 3-4.) The factual situation of that case is unlike the present case because the garnishments and attachments were issued after the suit was pending and the defendants had already appeared in court. In the present case, the initial attachment accompanied the institution of the suit and, as aforementioned, there were supplemental attachments as well. Thus, the issue facing Judge Teller was only whether the attachments could be issued pursuant to the commercial waiver after the suit had commenced. The defendant therein argued, as do the present defendants, that § 52-278f(1) authorizes the attachment only with the institution of the suit. Judge Teller rejected this argument, finding that § 52-278h specifically authorized applications for attachment after the institution of the suit, and even noted that " the forms and procedures provided therein shall be adapted accordingly." (Emphasis in original; internal quotation marks omitted.) Fleet Bank, N.A. v. Central Realty Associates, supra, 21 Conn. L. Rptr. 174, 175 (citing General Statutes § 52-278h). He also found that § 52-278h was enacted in 1975 in response to the Levin v. Turner decision and that "the legislature intended to allow a plaintiff to seek a prejudgment remedy at any time after the suit was brought." Id.
Judge Teller next noted that § 52-278h provided that the forms and procedures would be adapted for a pending proceeding, and that common sense dictated the allowance of the prejudgment remedy. He noted that § 52-278h incorporated § 52-278f, and that the legislation could have excluded the commercial waiver section if it had so desired. Id. Finally, he referred to § 52-278b, which set up the general methodology for prejudgment remedies through compliance with a statutory framework "except an action upon a commercial transaction wherein the defendant has executed a waiver as provided in section 52-278f . . ." (Internal quotation marks omitted.) Id., 175-76 He rejected the notion that the request for a prejudgment remedy must be made by motion. Id., 176. Judge Teller did not address the issue of supplemental attachments pursuant to a commercial waiver, and thus, this court rejects the plaintiff's argument that the Fleet Bank case is dispositive of the present issue.
This court is also aware of the case of People's Bank v. Bilmor Building Corporation, but does not find it dispositive of the issue of whether the commercial waiver in this case may be used to gain supplemental garnishments and/or attachments throughout the case. The issue in People's Bank, a mortgage foreclosure action, was only "whether a prejudgment attachment may be obtained, as additional security, to secure recovery of an anticipated deficiency judgment when there is an expectation that the property securing the debt may not be sufficient to satisfy the debt." People's Bank v. Bilmor Building Corporation, 28 Conn. App. 809, 810, 614 A.2d 456 (1992). The commercial waiver in the People's Bank promissory note permitted a more generous utilization of prejudgment remedies than the limited scope of the present waiver.
The commercial waiver in the promissory note in People's Bank stated in pertinent part: "Makers hereby waive the right to prior notice of and a hearing on the right of any holder of this note to a prejudgment remedy, which remedy enables said holder by way of attachment . . . to deprive Makers of . . . any of their property at any time prior to judgment in any litigation instituted in connection with this note." (Emphasis added.) People's Bank v. Bilmor Building Corporation, 28 Conn. App. 809, 811 n. 2, 614 A.2d 456 (1992).
The commercial waiver in the present case does not contain the emphasized language that was in People's Bank. The waiver states in full: "THE BORROWER AND EACH OTHER PERSON WHO MAY BECOME LIABLE FOR ALL OR ANY PART OF THIS OBLIGATION ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION AND HEREBY VOLUNTARILY AND KNOWINGLY WAIVE THEIR RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES AS AMENDED, OR AS OTHERWISE ALLOWED BY THE LAW OF ANY STATE OF [SIC] FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER OR ITS SUCCESSORS OR ASSIGNS BY DESIRE TO USE." (Affidavit in Support of Prejudgment Remedy Issued Pursuant to Commercial Waiver, June 25, 2003, p. 3.)
In People's Bank, the plaintiff argued that the property securing the debt was inadequate to satisfy the debt, so it needed additional security by way of attachment and prejudgment remedies. The trial court, Aronson, J., granted the defendant's motion to dissolve an ex parte prejudgment attachment, and denied the plaintiff's application for a prejudgment attachment. The appellate court overruled the trial court, and held that "a mortgagee may obtain additional security for a mortgage debt by means of a prejudgment remedy, if there is probable cause to believe a deficiency judgment will be rendered and a court can make an educated prediction as to the probable amount of the deficiency." Id., 823. The court found that the legislature did not explicitly prohibit the use of a prejudgment remedy for a deficiency judgment in a foreclosure action. The court did not address the issue concerning subsequent attachments.
II A.
Since this case turns on statutory interpretation, as previously mentioned, this court must set forth the standard of interpretation for the prejudgment remedy statutes. The five-panel court in Feldmann v. Sebastian, when discussing the prejudgment remedy line of statutes stated: "[A] plaintiff's attachment of a defendant's real property is valid only when the plaintiff strictly follows the applicable statute. [The court] stated that the statute [regarding attachments] is . . . exclusive. Being in derogation of both common right and common law, it is one to be strictly interpreted and pursued. Its provisions and requirements may not be disregarded with impunity, nor waived or changed by courts . . . [The courts] consistently have adhered to these principles of strict construction in dealing with various aspects of prejudgment remedy statutory schemes." (Citations omitted; internal quotation marks omitted.) Feldmann v. Sebastian, 261 Conn. 721, 725, 805 A.2d 713 (2002). See also William Beazley Co. v. Business Park Associates, 34 Conn. App. 801, 803, 643 A.2d 1298 (1994) (stating that prejudgment remedies are mandated by statute, and the law requires strict compliance with the prejudgment remedy line of statutes).
B. 1.
The line of statutes dealing with prejudgment remedies do, in fact, contain a provision for modifying and vacating prejudgment remedies; yet they do not contain a provision for continuous use of a commercial waiver to attach and garnish subsequent land or assets. In strictly construing the prejudgment remedy statutes, this court finds no support for the plaintiff's argument that it can utilize the commercial waiver for repeated seizure of assets once the lawsuit has commenced. The legislature has authorized a process to modify an existing attachment. See Bank of Boston Connecticut v. Barbieri, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. CV 91 0388963 (June 10, 1991, Satter, J.) ( 4 Conn. L. Rptr. 183, 6 C.S.C.R. 601) (pointing out that the plaintiff may seek the right to additional prejudgment remedies); Shorrock v. Law, Superior Court, judicial district of Stamford, Docket No. CV 96 0151339 (November 13, 1996, Karazin, J.) (holding that plaintiffs were entitled to a modification of the prejudgment remedy, due to the finding of probable cause, to include other property that would bring the value of the prejudgment attachments up to the total amount that the plaintiffs sought in the case).
Section 52-278k states: "Modification of prejudgment remedy. The court may, upon any application for prejudgment remedy under section 52-278c, 52-278e, 52-278h or 52-278i, modify the prejudgment remedy requested as may be warranted by the circumstances. The court may, upon motion and after hearing, at any time modify or vacate any prejudgment remedy granted or issued under this chapter upon the presentation of evidence which would have justified such court in modifying or denying such prejudgment remedy under the standards applicable at an initial hearing." General Statutes § 52-278k.
The issue was discussed in Connecticut National Bank v. Giacomi. The trial court, Blue, J., stated in a post-judgment motion hearing to dissolve prejudgment remedies, that pursuant to § 52-278k, which governs modification of prejudgment remedies, a court may modify or vacate a prejudgment remedy upon motion and a hearing. Connecticut National Bank v. Giacomi, Superior Court, judicial district of Waterbury, Docket No. 105860 (April 7, 1994, Blue, J.) ( 11 Conn. L. Rptr. 351). In analyzing the section, he stated: "[t]he two sentences contained in this statute apply to distinct situations. The first sentence is concerned with applications for prejudgment remedies. This sentence does not apply to prejudgment remedies issued under Conn. Gen. Stat. 52-278f, where the right to a predeprivation hearing has been waived. The second sentence applies to motions to modify or vacate existing prejudgment remedies. That sentence applies to `any prejudgment remedy granted or issued under this chapter.' I conclude from this statutory language that, while defendants in commercial transaction cases who have waived their right to a notice and hearing are not statutorily entitled to predeprivation hearings, they are statutorily entitled to postdeprivation hearings on motions to modify or vacate prejudgment remedies already issued." Id. This court is in agreement. The second sentence concerning modification or vacation of " any prejudgment remedy issued under this chapter," does not limit itself to the sections set forth in the first sentence.
Similarly, § 52-278f(3) states that in a commercial transaction in which there was a waiver of notice and a hearing, the plaintiff's attorney may issue the writ for a prejudgment remedy without securing a court order if the plaintiff satisfies the requirements of subsection (b) of § 52-278e. General Statutes § 52-278f(3). Subsection (b)(2) of § 52-278e states that the rights a defendant has in a prejudgment remedy situation include in relevant part, "the right to a hearing to request that the prejudgment remedy be modified, vacated or dismissed or that a bond be substituted . . ." General Statutes § 52-278e(b)(2). This also provides support for the above analysis, because the statutes explicitly mention modification and vacation as being the manner in which to alter the prejudgment remedy. They do not explicitly mention taking a second, third, fourth, fifth, etc. bite of the apple by permitting supplemental attachments or garnishments throughout the case. As a final note, throughout the prejudgment remedy line of statutes, there is no reference to "prejudgment remedies" — the language is only written in the singular, thereby suggesting that a commercial waiver may only be used once, and not repeatedly, throughout the case.
It is clear that the plaintiff's repeated use argument flies in the face of twenty-first century judicial process. The repeated seizure of assets and property belonging to an opposing party during litigation creates more than an unfair advantage in the seizing party; surely the impact of this practice on the defendant would be detrimental to its ability to litigate equally before the court. This outcome could easily be prevented if modification is subject to motion practice.
2.
In its attempt to utilize the commercial waiver on more than one occasion, the plaintiff has served a number of writs on the defendants. General Statutes § 52-48 governs the return day of process, which is the date upon which the case commences. There is no authority for multiple return dates. "The process which must be served under Section 52-278f is the institution of the action and original writ for prejudgment attachment. Neither the foreign attachment statutes nor the prejudgment remedy statutes require the inclusion of an affidavit or notice for writs of garnishment or attachment served after the issuance of the original writ for prejudgment attachment." Neiditz v. Magic Video, Inc., Superior Court, judicial district of Hartford, Docket No. CV 94 5367331 (November 23, 1994, Sheldon, J.) ( 13 Conn. L. Rptr. 88, 89). General Statutes § 52-278m states: "Whenever a prejudgment remedy is sought under the provisions of sections 52-278h or 52-278i against a party who has previously filed a general appearance in such action, personal service of any application or order upon such party shall not be required, unless ordered by the court, but any such application or order may be served in the same manner as any motion in such action." Therefore, by filing numerous writs with proposed return dates, the plaintiff has arguably and impermissibly created a number of new actions within one action; it has created a procedural nightmare.
Section 52-48 states: "Return day of process. (a) Process in civil actions, including transfers and applications for relief or removal but not including summary process actions, brought to the superior court may be made returnable on any Tuesday in any month. The return day in any summary process action may be any week day, Monday through Saturday, except a holiday. (b) All process shall be made returnable not later than two months after the date of the process and shall designate the place where court is to be held." General Statutes § 52-48.
In conclusion, pursuant to statutory construction and applicable case law, this court does not recognize the ability of a plaintiff to utilize a commercial waiver repeatedly after a lawsuit has commenced. This court also does not recognize the practice of filing numerous writs with new return dates — the practice of the courts only recognizes an original writ with one return date. Thus, the defendants' motion to dissolve the supplemental attachments and garnishments is hereby granted. The plaintiff is certainly allowed to follow the procedures set forth in § 52-278k to obtain a supplemental prejudgment remedy.
Berger, J.