Opinion
FSTCV176033997S
08-06-2019
RRML Capital Resources, LLC v. John L. Threshie, Jr.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Povodator, Kenneth B., J.T.R.
MEMORANDUM OF DECISION
POVODATOR, JTR.
This is a lawsuit that originally was commenced as an action seeking to enforce a foreign default judgment. As ordered by the court prior to trial, the plaintiff filed an amended complaint, adding counts sounding in breach of contract and unjust enrichment. The matter was tried to the court on April 17, 2019. No post-hearing briefs were submitted by the parties.
Liability
There is no dispute with respect to most of the basic facts relating to the breach of contract claim, as asserted in the first count. The defendant borrowed $12, 500 from the defendant, paid for a one-year extension of the deadline for paying the principal, and has never provided the plaintiff with a cash payment of the principal. (The first year’s interest was paid.) To the extent that interest accrued over the years, the defendant does not appear to dispute the amount calculated, net of any payments he made. However, the chief dispute centers on stock he claims he provided as settlement of his indebtedness- some 20 million shares of stock in a company he controlled. It was the contention of the defendant that the shares, delivered in the name of the plaintiff’s principal, satisfied his loan obligation based on the minimal but non-zero value of those shares at the time of delivery. In essence, the defendant contends that whatever indebtedness may have arisen in the original loan transaction, has been satisfied.
The plaintiff responded to that contention by denying that it accepted the shares in satisfaction of the debt- while shares were supposed to be provided in the form of collateral, the shares identified by the defendant actually were a payment to the defendant’s principal for services he rendered. There also was testimony that nothing could be done with the shares (inferentially, including sales) without the assistance of the defendant. In essence, the plaintiff contended that it could not have liquidated the shares even if it had chosen to accept them as payment; there had been no unconditional transfer of the shares in a manner that might constitute payment of the debt. Finally, the shares were issued in the name of the plaintiff’s principal rather than the plaintiff itself, somewhat confirming the contention that the shares were delivered to the plaintiff’s principal in a personal sense.
The court finds credible the testimony/evidence provided by the plaintiff in this regard, and therefore concludes that the defendant did not prove what amounted to a special defense of payment of the indebtedness via such stock.
Therefore, with respect to the first count asserting a breach of contract, there is no dispute as to the creation of a contractual obligation- the debt- and especially that the defendant had signed the promissory note (Exhibit 1). Absent payment of the principal by the extended deadline for payment, the defendant was in default of his contractual obligations. Several notices were sent to the defendant concerning the imminence of the deadline for payment (eliciting a claim from the defendant that the stock had been in payment of his indebtedness, which never was acknowledged), including at least one notification that no further extensions would be allowed. The court having concluded that the defendant did not prove his special defense of payment, the court finds that the plaintiff has established that the defendant breached his contractual obligation to repay the $12, 500 with appropriate interest- the debt remains unsatisfied.
In its second count, the plaintiff has asserted a claim for unjust enrichment. Unjust enrichment can only lie if there is no existing contractual obligation. The court has found there to have been a contractual obligation- essentially undisputed with respect to creation. Therefore, there has been no unjust enrichment, not because there has been no benefit to the defendant by virtue of the initial payment made to him, but because the existence of a legal obligation (based on contract) precludes an equitable claim to recover the same money. (If there were to be any defect in the contract claim, the plaintiff would be entitled to unjust enrichment in the amount of the outstanding principal.)
In Meribear Productions, Inc. v. Frank, 328 Conn. 709, 724 (2018), the court stated that the best practice would be to address the merits of inconsistent claims asserted by a plaintiff, but entering judgment in favor of the defendant as to such inconsistent claims even if the plaintiff would have prevailed were there no mutual exclusivity of claims.
With respect to the effort in the third count to enforce/domesticate the foreign judgment, the starting point is the burden of proof. With the exception of the burden-shifting consequences of a plaintiff moving for summary judgment, in general "foreign judgments are presumed valid and the burden of proving that the foreign court lacked jurisdiction lies with the assailant." Maltas v. Maltas, 298 Conn. 354, 370, 2 A.3d 902, 914 (2010). The defendant offered no credible evidence- as far as the court recalls, no evidence at all- suggesting much less proving that there was any inadequacy in the notice given to him of the commencement of the New Jersey proceeding, consistent with New Jersey law. No effort was made to suggest that service was not made as recited in the New Jersey court papers, or that he did not live at the address at which the suit papers were served. No effort was made by the defendant to challenge the propriety of the court asserting personal jurisdiction over him and no challenge to the entry of judgment against him in terms of liability or damages. (The plaintiff did offer records attesting to the adequacy of service of process on the defendant in connection with the New Jersey proceedings as well as the court judgment.) Accordingly, given the presumption of validity, the court concludes that the New Jersey judgment is a valid and binding judgment and enters judgment against the defendant in accordance with the results of the New Jersey proceedings.
Damages
The promissory note dated September 30, 2011 provides for interest at 10 percent per annum. As previously noted, the loan period was extended by agreement of the parties (upon the payment of a fee for that privilege). The promissory note also provides for payment of legal fees, should it be necessary to pursue legal action to obtain recovery of the principal and interest due.
The court will start with a review of the various components of the damages claimed and proved. The unpaid principal is $12, 500. The plaintiff has calculated interest from September 30, 2013 through March 30, 2019, as totaling $8, 020.83, but also pointed out that the reference to the starting date for interest as September 30, 2013 was erroneous- the correct starting date should have been September 30, 2012. Implicitly, the plaintiff suggested that the calculation reflected in the documentary submissions and testimony of the plaintiff’s principal understated interest by about a year.
The New Jersey judgment, dated April 1, 2016, found that the principal plus accrued interest to that date totaled $16, 847.11. Costs also were allowed, but no documentation was provided as to that amount. There is no indication of continuing interest and if so, at what rate. (There was no evidence or request for judicial notice as to any statutory provision in New Jersey for postjudgment interest.)
The court has encountered a number of difficulties in reconciling the affidavit of debt and testimony relating to the aggregate attorneys fees, with the billing records reflected in Exhibit 10. The testimony and affidavit of debt reflect actual attorneys fees of $7, 924.92, and this figure supposedly was generated by subtracting claimed costs of $566.80 from claimed aggregate billing of $8, 491.72. However, the court’s calculation of the attorneys fees and costs, adding up the invoices set forth in Exhibit 10, resulted in an aggregate billing of $9, 016.72. Conversely, the court could not find $566.80 in costs reflected in Exhibit 10- the only entries that might be characterized as reflecting taxable costs total $434.72 (and that appears to include the service fee for paying the entry fee by credit card- $367.92 instead of the actual entry fee of $360). There is an apparent discrepancy as to costs of $132.08, and the court could find no entries anywhere in Exhibit 10 containing any right-of-the-decimal-point figures other than increments of $0.50 other than the two entries adding up to $434.72. (There are $140 of claimed taxable costs listed on the proposed bill of costs that do not correspond to any actual cash outlays that might have been incorporated into any bills/invoices, so those costs should not be subtracted from the aggregate billing.)
The difference between the court’s calculation of $9, 016.72 and the plaintiff’s calculation of $8, 491.72 is $525. That is exactly the amount of attorneys fees set forth in the first invoice. Therefore, it seems that in adding up the invoices, only the portion of that first invoice attributable to out-of-pocket expenses was incorporated into the total.
The $132.08 identified as a perceived discrepancy, when added to the $7.92 that appears to represent the service fee for paying the entry fee by credit card, totals $140, presumably accounting for what otherwise appeared to be discrepancies.
Therefore, the court needs to redo the math, based on the actual documentation provided. The invoices submitted were in the amounts of $959.72 (12/17/17) plus $4, 682.50 (7/25/18) plus $3, 374.50 (4/16/19), yielding an aggregate billing of $9, 016.72. From that needs to be deducted $426.80 reflecting the billed costs of $434.72 less the service fee of $7.92 (properly included in the legal costs exclusive of taxable costs). The net result for attorneys fees and expenses, other than taxable costs, is $8, 589.92.
The plaintiff also estimated costs of legal services for trial at $2, 360, reflecting eight hours of such services. The trial, however, finished shortly after 1 PM, and there were no post-hearing activities of record. Even allowing some time for preparation early that morning, and allowing time for a return to counsel’s office once the hearing had concluded, the court believes that six hours is a more reasonable estimate of the amount of time needed on the day of the hearing, and at the inferred rate of $295 per hour, that totals $1, 770. Adding this figure to the amount determined in the previous paragraph, yields a total for attorneys fees and expenses (nontaxable) in the amount of $10, 359.92.
Returning to the issue of interest, as noted, the plaintiff’s calculation may have omitted a year of interest. Putting aside, for the moment, whether the court should recalculate interest so as to include a possibly missing year, there is a more prominent problem. Again, the court has had difficulty in replicating the plaintiff’s calculation. Ten percent interest on $12, 500 is $1, 250 per year which translates to $104.17 per month. The 77 months interest period identified on Exhibit 11 would yield $8, 020.83 which is the figure being claimed, except the time period between September 30, 2013 and March 30, 2019 is not 77 months- by the court’s calculation that is 66 months (five years to September 30, 2018 plus an additional 6 months to get to March 30, 2019). Conversely, 77 months is almost the right calculation from September 30, 2012 through March 30, 2019- it should be 78 months (six years plus six months). The correct calculation from September 30, 2013 through August 8, 2019 totals $7, 319.07 in interest; if the calculation goes back to the correct starting date of September 30, 2012, interest totals $8, 569.07.
In order to minimize roundoff error, the court utilizes whole years whenever possible. Therefore, there may be minimal discrepancies (a few cents) between the court’s calculation and the plaintiff’s method for calculation for identical time periods.
Thus, while the plaintiff stated that its calculation erroneously started as of September 30, 2013, it appears that an attempt had been made to do the actual calculation from September 30, 2012 subject to either an error in counting the months or perhaps having done the calculation a few weeks earlier such that one less month was included in the calculation, without updating. Under the circumstances, then, the court finds that the interest through August 8, 2019 is $8, 569.07.
To summarize: with respect to the breach of contract claim, the plaintiff is entitled to damages in the principal amount of $12, 500, plus interest through August 8, 2019 in the amount of $8, 569.07, plus attorneys fees and nontaxable costs in the amount of $10, 359.92.
With respect to the second count, asserting unjust enrichment, if there were no valid contract-based claim (and that would include the New Jersey judgment), the plaintiff would be entitled to the $12, 500 principal representing the extent to which the defendant received a benefit from the plaintiff without having paid for it. However, because of the mutual exclusivity of contractual claims and a claim of unjust enrichment, judgment must enter in favor of the defendant on this count.
With respect to the third count, seeking to domesticate/enforce the New Jersey judgment, the judgment was in the amount of $16, 847.11, with no indication in the judgment as to the extent to which interest (postjudgment) was to be awarded. Therefore, as to the third count, the plaintiff is entitled to judgment in the amount of $16, 847.11, with the understanding that that amount is duplicative of the amount of the judgment set forth in the first count, and the plaintiff is entitled to only one satisfaction of the indebtedness.
Conclusion
The court has found that the defendant incurred an obligation as set forth in the promissory note, with the term of payment extended by one year, but has never paid the principal. The court has rejected the defense that the payment of shares to the plaintiff’s principal actually was a payment to the company- the company never accepted the shares in that manner, the shares were in the name of the principal, the shares were given to the principal for services he rendered, and the shares were not sufficiently liquid so as to justify a refusal on the part of the plaintiff to accept them, had they been tendered to the plaintiff.
The court has found for the plaintiff on the first and third counts but based on the mutual exclusivity of contractually-based claims and unjust enrichment, the court is compelled to enter judgment for the defendant on the second count.
Judgment is entered in favor of the plaintiff on the first count in the amount of $31, 618.49, with interest continuing to accrue on the principal of $12, 500 at the rate of 10 percent per annum. Judgment is entered in favor the plaintiff on the third count in the amount of $16, 847.11. Judgment is entered in favor of the defendant on the second count. Costs will be taxed by the clerk.